Charter Grows Pay TV Subs for Full Year for First Time in Over a Decade
The company, in which John Malone's Liberty Broadband owns a big stake, is waiting for regulators to rule on its planned acquisition of Time Warner Cable.
Cable operator Charter Communications, in which John Malone's Liberty Broadband owns a big stake and which has agreed to acquire Time Warner Cable, on Thursday reported its fourth-quarter financials and confirmed that it grew its video subscribers for the quarter and full year 2015.
The company said this marked its first full-year pay TV sub gain in more than a decade.
After years of subscriber losses amid the boom in telecoms and then digital over-the-top competitors like Netflix, Charter joins Time Warner Cable in returning to full-year growth in pay TV customers. Big cable companies are winning over some video subscribers that in the past chose satellite and telecom giants. Comcast on Wednesday also had posted improved video sub momentum for the fourth quarter and full year.
The last time Charter posted video sub gains was in 2001, according to a spokesman. Charter has mentioned that growth goal, for combined residential and business services subs, a few times in recent quarters.
The company, led by president-CEO Tom Rutledge, on Thursday reported a loss of $122 million, or $1.09 per share, compared with a year-ago loss of $48 million, or 44 cents per share. The higher loss was driven by $231 million in interest expense related to the financing of Charter's pending transactions with Time Warner Cable and Bright House, offset by higher income from operations and lower income-tax expense. Revenue grew 6.4 percent to $2.51 billion.
Transition costs related to the planned acquisitions accounted for $22 million in the fourth quarter, boosting overall operating costs and expenses by 5.9 percent over the year-ago period. Excluding transition costs, expenses increased 5.3 percent. Fourth-quarter programming expenses increased 7.9 percent.
The cable firm added 33,000 video subscribers in the latest period and 11,000 for the full year, ending 2015 with 4.32 million residential video subscribers and 108,000 business video customers.
"Our consumer-focused product and service strategy continued to drive Charter's accelerating customer growth in 2015, including positive video net additions," said Rutledge. "Charter remains the fastest-growing cable company in the United States because it provides highly-competitive consumer-friendly products at attractive price points, in simple packages, with quality customer service."
He added: "We look forward to bringing Charter Spectrum to the Time Warner Cable and Bright House footprints following the close of our transactions, offering consumers better products, prices and service, driving greater growth for our new company and our business partners and creating value for shareholders."
On the company's earnings conference call, Rutledge said the company’s video subscriber growth was due to “an improved video offering.”
Asked about the popularity of so-called "skinny" bundles, he said 96 percent of Charter customers still are expanded basic-service customers. But he said that if content companies allowed for more skinny bundles, pay TV firms could offer "high-quality packages" that would work well in the marketplace.
Asked about the regulatory review of the TWC deal, Rutledge said Charter has petitioned the California Public Utilities Commission to move up its review, which is currently expected to be finalized in June. He said the company hasn’t heard back yet on the timing request.