Charter Communications (NASDAQ: CHTR) notched an increase of 7.6 percent in its overall revenues, but the company reporting losing 33,000 pay-TV subscribers. Those subscriber losses were far higher than some Wall Street analysts were expecting: JP Morgan had expected Charter to lose 15,000 video subscribers, while Jefferies had predicted 25,000 customer loses.
Charter's 33,000 figure also represented a slight uptick over the 29,000 pay-TV customers Charter lost in the second quarter of 2014. The Stamford, Conn.-based MSO ended the second quarter with just over 4.1 million video customers.
Addressing Charter's pending takeovers of Time Warner Cable (NYSE: TWC) and Bright House Networks, Charter Chairman and CEO Tom Rutledge reiterated the company's promises to abide by the FCC's net neutrality guidelines, repatriate thousands of overseas customer service jobs, build out rural broadband, and establish a minimum broadband speed of 30 Mbps.
Rutledge also said Charter will deploy more than 300,000 Wi-Fi access points in the coming year.
Beyond the topic of the mergers, Rutledge was asked several times during today's conference call with investment analysts about the MSO's ongoing development of a skinny bundle pay-TV product, at least vaguely similar to Dish Network's (NASDAQ: DISH) IP-delivered Sling TV.
"It's not really a technology issue at all," he said. "The real question is what are the rights issues with what we already sell … Right now, [pay-TV] video services are being sold in around 100 million homes in a big bundle that's very efficient. It's hard to find a way to pull that apart and make it work."
A skinnier, less expensive product would be appealing to a sizable segment of consumers, Rutledge said, "but some of the content companies would suffer in that kind of environment. And that's why we don't have the product yet."
Rutledge also said Charter is still working out the deployment of its cloud-based Spectrum Guide video user interface, a technology developed by ActiveVideo. "We're still testing it, deploying it and operationalizing it," he said, noting that about 1.6 million Charter pay-TV customers should receive the platform in the coming months.
Charter's interactive Spectrum Guide conducts all IP-processing at the server level, importing video images back to the set-top as an MPEG-2 video signal. As such, the system is generally less expensive than other approaches because much of the computing is conducted in the cloud rather than on the device. Thus, Rutledge was repeatedly asked whether Charter's capital expenditures would decrease due to the company's embrace of cloud-based services.
Overall, he said, investors can "expect to see the operator cost curve continue to improve as a result of our digital investments."
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