Charter Communications said it lost 104,000 pay TV subscribers in the third quarter, a loss Charter Chairman and CEO Tom Rutledge said is partly due to video piracy.
“There’s a lot of pressure on the video business,” Rutledge said. “The biggest pressure is price. But the second biggest pressure is that many programmers are distributors, whether they know it or now. And because of password sharing and multiple-stream products … You have 35 million one-person households in the U.S. The multiscreen products sold to those households also them to purchase one product and share it with multiple users.”
Charter said that most of the video losses are still coming from drop-offs from acquired “limited basic customers” acquired from Time Warner Cable. The video losses compared to a drop of just 41,000 customers in the third quarter of 2016.
Analysts were disappointed with Charter’s third-quarter performance overall.
“Results were disappointing, with revenue, EBITDA, and free cash flow all missing consensus expectations,” said New Street Research’s Jonathan Chaplin. “Broadband and video adds were well-short of Consensus as well. Investors had expected a weak set of results in the run-up into of earnings; however, it is now clear that consensus numbers need to come down, which will likely pressure the stock in the near-term.”
Broadband and biz services do their usual revenue driving
The No. 2 cable operator in the U.S. added 249,000 residential broadband users in the quarter. Overall, Charter’s third-quarter revenue grew by 4.2% to $10.5 billion, with commercial services revenue increasing 8%.
Rutledge said Charter has “turned the corner” on its integrations of 2016 acquisitions TWC and Bright House Networks.
“We have more sales and less disconnects than we did a year ago,” he said. “That translates into more customers—more higher quality customers—who produce more revenue.”
Rutledge also said Charter’s antiquated wireless rollout will occur in the second quarter of 2018. The operator is currently conducing field testing with employees. Elaborating on Charter’s wireless partnership with Comcast, Rutlged said the two companies share most of the same vendors for their respective mobile businesses.
“We’re using their experience today to make our customer experience better,” he added.