Charter Loses 109,000 Pay TV Subs, Posts Lower Earnings
The cable giant, led by CEO Tom Rutledge, continues to face stiff competition from online video streaming platforms like Netflix and Amazon.
Cable operator Charter Communications, in which John Malone's Liberty owns a big stake, on Thursday reported lower third-quarter earnings and a net loss of 104,000 video subscribers, higher than the 47,000 lost in the same period of 2016.
During the second quarter, Charter lost 90,000 pay TV subscribers, and the first quarter of the year saw a 100,000 subscriber drop.
Despite the widening subscriber losses, Charter execs during an analyst call said they're well positioned to continue growing their video business with double-play and triple-play bundles. That will come amid continuing cord-cutting pressures brought on by Netflix, Amazon and other video streaming giants and new MVPD platforms like Hulu and YouTube putting pressure on cable bundle pricing.
"We expect that we can still grow a rich video package inside of our product bundles, and we think we'll do that at the expense of our competitors, and we think the general category will continue to decline, slightly," Charter chairman and CEO Tom Rutledge told analysts during a morning call about his packaged product offerings.
Rutledge pointed to TV programmers increasingly becoming distributors via TV Everywhere products and multiple-streaming products putting cable bundle pricing under pressure.
"So there's an enormous pressure that comes out of the total price of content, plus there's an enormous ability for people to receive free content because of the way content distributors are securing their product so ineffectively. As a result, you'll see continuing pressure on video," Rutledge said.
Charter reported net income attributable to shareholders at $48 million, compared with a year-ago pro forma net income of $189 million. Revenue rose 4.2 percent to $10.5 billion, driven by growth in internet, video and commercial revenues.
That was offset by lower advertising revenue, down 11.1 percent, due to lower political revenue after last year's U.S. presidential election. Charter said it added 225,000 net subscribers in the third quarter, compared with 275,000 in the year-earlier period.
The $55 billion acquisition of Time Warner Cable and the $10.4 billion purchase of Bright House in May of last year made Charter the second-biggest U.S. cable company behind Comcast, and it has focused on higher-end subscribers, which has meant a loss of lower-end Time Warner Cable customers.
Oct. 26, 11 a.m. Updated with comments by Charter execs during an analysts call.