Charter Communications reported losses of 47,000 video customers in the third quarter, primarily driven by customers in the MSO’s newly acquired Time Warner Cable footprint ditching their service when Charter wouldn't match their promotional rates.
Charter noted that it grew pay-TV subscribers across its legacy footprint by 51,000, or 1.2 percent, in the quarter. High-speed data subscribers grew by 350,000, compared to 369,000 in the third quarter of 2015.
The company rebranded TWC systems in Los Angeles and Dallas during the quarter under its “Spectrum” brand during the third quarter.
It has plans to next deploy Spectrum across TWC’s New York City footprint and the Florida systems acquired during the Bright House Networks purchase. The Spectrum conversion will be 50 percent completed by the end of the year, the company said.
During their third-quarter earnings call with investment analysts, Charter executives warned of continued increased churn within the TWC base.
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Charter Chairman and CEO Tom Rutledge said the company is “trying to do those smart things you can do with an existing customer base that’s been mis-priced and move them in the right direction.” He added that the rebranding of the TWC and BHN footprints will be completed by next spring.
Charter’s third-quarter pro forma revenue grew 7.4 percent year-over-year to $10.4 billion, matching the Wall Street forecast. However, analysts were surprised by the amount of programming cost paid by Charter during the quarter.
“The company’s programming cost growth was much higher (8.2 percent vs. 3.1 percent) than we expected while non-programming cost growth (1.6 percent vs. 4.3 percent) was much lower than expected,” said Barclay’s Kannan Venkateshwar, in a note to analysts.
“We had expected programming cost synergies to have a bigger impact on the quarter than they actually did, and some of this could be on account of ongoing disputes between Charter and the programmers,” Venkateshwar added.