Charter Loses More TV Subs, Says Time Warner Cable Savings to "Significantly Exceed" Target

Jemal Countess/Getty Images
Charter Communications chairman and CEO Tom Rutledge

The company, led by CEO Tom Rutledge, issues its second quarterly earnings report since its acquisition of Time Warner Cable, which dragged down the latest sub figures, and Bright House.

Cable operator Charter Communications, in which John Malone's Liberty Broadband owns a big stake, on Thursday reported its third-quarter financials and subscriber trends.

It was Charter's second earnings report since closing two mega-deals, namely the $55 billion acquisition of Time Warner Cable and the $10.4 billion purchase of Bright House. The deals made Charter the second-biggest U.S. cable company behind Comcast.

The company also said that "integration and key operating initiatives" are "on track."

The company, led by chairman, president and CEO Tom Rutledge, reported earnings of $189 million, compared with $2 million on a pro-forma basis in the year-ago period. The pro forma figure assumes that Bright House and Time Warner Cable had been part of Charter in the year-ago period as well. Helping earnings was "a gain on financial instruments driven by the revaluation of legacy Time Warner Cable's British pound debt and related currency swaps, partly offset by higher other operating expenses, including severance-related and transaction expenses and higher depreciation and amortization," the firm said. Revenue rose 7.4 percent to $10 billion.

The cable firm lost 47,000 residential video subscribers in the latest period, compared with a loss of 20,000 in the year-ago period on a pro forma basis, ending September with 16.94 million residential video subscribers. It added 10,000 small and medium business video subscribers, compared with 7,000 in the year-ago period.

The video sub losses were driven by higher losses in the former Time Warner Cable systems, while the video performance improved in Charter and Bright House's legacy markets. Legacy Charter systems grew video customers by 19,000 in the period.

"The integration of Time Warner Cable and Bright House Networks is on track, and we are beginning to implement the Spectrum brand, with better products, pricing and packaging," said Rutledge. "Improving our service operations in a way that allows consumers to recognize Spectrum as the best service provider will take time, but our proven operating strategies will work for customers, employees, shareholders and the communities we serve."

Charter management previously had said it expects higher than previously outlined cost savings from its two big recent acquisitions, and CFO Christopher Winfrey on Thursday reiterated that, saying synergies would "significantly exceed" the announced target of $800 million in TWC annualized programming and overhead savings by the end of year three after the deal's close.

Management had previously also said that by the end of the first year, annual deal savings would hit more than $600 million, compared with a previous estimate of $400 million to $500 million. Winfrey on Thursday cited a new target of $700 million.

The CFO on Thursday reiterated that the company would look for possible accretive acquisitions over time, but management signaled nothing was imminent.

comments powered by Disqus