- Share this article on Facebook
- Share this article on Twitter
- Share this article on Email
- Show additional share options
- Share this article on Print
- Share this article on Comment
- Share this article on Whatsapp
- Share this article on Linkedin
- Share this article on Reddit
- Share this article on Pinit
- Share this article on Tumblr
Charter Communications lost fewer pay TV subscribers in the second quarter, the cable giant said Tuesday in its first earnings report since closing two mega-deals: the $55 billion acquisition of Time Warner Cable and the $10.4 billion takeover of Bright House.
The deals make Charter, led by CEO Tom Rutledge, the second-biggest U.S. cable company behind Comcast.
Charter lost 152,000 residential pay TV subscribers in the second quarter, compared with 170,000 in the year-ago period assuming the TWC and Bright House deals had been in place then. The company said the result was “driven by better year-over-year performance at Legacy Charter and Legacy Bright House, partially offset by higher video losses at Legacy TWC.”
The company added 9,000 commercial video subscribers in the latest period, up from 7,000 in the year-ago period. Overall, that meant a loss of 143,000 pay TV subs in the second quarter, better than the year-ago loss of 163,000.
Wunderlich Securities analyst Matthew Harrigan forecast Charter would lose 22,000 pay TV subscribers in the second quarter in its Charter systems, Time Warner Cable would lose 30,000 and Bright House 6,000 to see the combined company end June with a total of 17.447 million subs, down 58,000. MoffettNathanson analyst Craig Moffett predicted Charter would overall lose 43,000 pay TV subscribers in the second quarter to end June with a total of 17.365 million.
The second quarter is seasonally weak for pay TV companies, as students and snowbirds end their subscriptions to go home for the summer. Big cable operators have seen improved subscriber momentum in recent quarters, while telecom and satellite TV firms have seen weaker trends. Comcast recently reported its smallest second-quarter pay TV subscriber decline in more than a decade, losing just 4,000 subs.
Charter’s pro forma earnings for the second quarter totaled $280 million, compared with $107 million during the same period last year, driven by higher income from operations. On an actual basis, earnings reached $3.1 billion, compared with a year-ago loss of $122 million. Second-quarter revenue rose 6.6 percent to just shy of $10.0 billion.
“On May 18, we closed our transactions with Time Warner Cable and Bright House Networks, creating a new company with the ability to innovate and grow faster,” said Rutledge. “Our organization is in place, we are executing on our plans and our track record at Charter shows that our operating model, founded on providing high-quality products and service at great prices, works. We will apply that model as quickly as possible to our new assets, putting our larger company on a long-term growth trajectory and building greater value for our shareholders.”
Charter, in which John Malone’s Liberty Broadband owns a big stake, is run by president and CEO Rutledge, who also added the chairman title after the completion of the two acquisitions. It had been the No. 3 cable operator in the U.S., with TWC second and Bright House No. 6. Together with TWC and Bright House, Charter is now America’s second-biggest cabler, but is still the country’s third-largest pay TV operator, behind AT&T/DirecTV and Comcast.
The merged company has particularly strong positions in New York and Los Angeles.
“The combination of Charter, TWC and Bright House will create a leading broadband services and technology company, serving over 25 million customers in 41 states,” the company said when closing the deal. The deal made Malone a big cable industry player worldwide, as his Liberty Global already owns cable assets across Europe and in parts of Latin America.
Charter has predicted $800 million in TWC and $125 million in Bright House programming and overhead elimination synergies.
Second-quarter programming expenses rose 7.5 percent on a pro forma basis.
Sign up for THR news straight to your inbox every day