Cable operator Charter Communications, in which John Malone’s Liberty Broadband owns a big stake, lost 138,000 pay TV subscribers in the first quarter.
Just like in the fourth quarter of 2020, Charter’s broadband user gains remained a key growth engine amid the coronavirus pandemic, but subscriber growth slowed over the comparable period of 2020.
Charter lost 156,000 residential pay TV subscribers in the first quarter, compared with a loss of 70,000 in the year-ago period. Including the addition of 18,000 small- and medium-size business clients, it lost 138,000 video customers after a year-ago loss of 70,000.
The cable giant’s broadband Internet business was once again a key growth area, recording 334,000 residential Internet subscriber net additions, down from 563,000 in the first quarter of 2020. Including small- and medium-size business clients, the gain of 355,000 compared with 582,000 in the year-ago period.
As of the end of March, Charter had more than 16.06 million total video subscribers and more than 29.23 million broadband customers.
Charter chairman and CEO Tom Rutledge said about the firm’s performance during the opening period of 2021: “We continue to execute well in a market environment that has not yet returned to normal. We added 355,000 Internet customers in the first quarter, and 2 million over the last year, for year-over-year growth of 7.3 percent.”He added: “Our value-driven operating strategy of providing multiple high-quality products at lower prices than sold individually continues to drive our growth.”
On an earnings conference call on Friday, Rutledge said the video business remains a “challenge” and “is going through a transformation,” with new relationships with programmers and consumers developing. He noted the firm now not only sells traditional pay TV packages, but also over-the-top products and direct-to-consumer services in a consignment mode. “We have every business model you can imagine,” he said, adding that this will “over the long term creates opportunity for us; right now, it’s quite disruptive.”
Asked how Charter is approaching content companies that offer their own streaming services with content they feature on their pay TV channels, which Charter carries, he reiterated previous comments that streaming strategies play into the value of content. That “is going to affect the value of content,” especially if it comes out of pay TV bundles, he said.
Rutledge previously had said that over time Hollywood giants’ growing focus on direct-to-consumer services could make paying for content bundles untenable. The question will be “do you put us in a position where we would be willing to drop your bundle package because a consumer could get those products directly, [and] there is no need for us to pay for that as part of the bundle,” the Charter CEO told an investor conference in December.
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