Charter changed counting method for seasonal Bright House customers in Q2

Charter Communications produced better second-quarter customer results than expected, in large part because it changed a key accounting methodology.

Customers acquired during the cable operator’s purchase of Bright House Networks are no longer taken off the books when they put their accounts in seasonal hibernation.

“Seasonal customers at Bright House now remain reported as customers throughout the year. That reduced the negative net additions impact we would have seen in the second quarter from customers activating a seasonal plan at Bright House,” explained Charter CFO Christopher Winfrey during last week’s second-quarter earnings call.

Winfrey said the reason for the change was to bring Bright House accounting in line with Legacy Charter practices. 

The change made a big difference for Charter, which reported only 90,000 lost pay-TV subscribers for the second quarter, far fewer than the 140,000 to 158,000 predicted by analysts.

Of those lost 90,000 subs, only 12,000 were in the acquired Bright House footprint—an area that produced 72,000 lost subscribers in the second quarter of 2016.

Notably, in the fourth quarter of 2016, Charter reported the addition of 34,000 pay-TV customers in the Bright House territory. This was juxtaposed against losses of 105,000 pay-TV users in Charter's acquired Time Warner Cable footprint, as seasonal Bright House users returned to full-service status.

RELATED: Q2 cord cutting falling short of analysts’ dire predictions

Bright House’s footprint extends to areas including Detroit and Bakersfield, California, but most of its customers reside surrounding the Central Florida location of its former owner, Advance Publications—a region with a heavy base of seasonal customers.

The better-than-expected Charter video numbers contributed to the notion that cord-cutting in the second quarter might not be as bad as analysts had predicted.

With the operators behind six of the top eight pay-TV platforms reporting second-quarter earnings this week, it appears cord-cutting during the period will not match the dire forecasts of some media and telecom investment analysts.

So far, with Comcast, AT&T, Charter Communications, Verizon and Altice USA reporting second-quarter earnings, the linear pay-TV sector has reported losses of 527,000 users.

Analysts had pegged the second-quarter attrition to exceed 1 million, with Wells Fargo’s Marci Ryvicker suggesting it could go as high as 1.28 million.