Charter loses 7K video subs, preps Spectrum Guide rollout, dismisses skinny bundling

Charter Communications (NASDAQ: CHTR) reported a loss of 7,000 video subscribers in the first quarter but expects to increase its TV customer base for the full year with wide deployment of its next-generation Spectrum Guide video service throughout the rest of 2015.

Speaking to investors on Friday, Tom Rutledge, president and CEO of Charter, said Charter's mostly completed "all-digital project" had been very "disruptive," forcing the MSO to "slow down the business" as it swapped out millions of user set-top boxes.

"Also, our biggest activity was the [just scuttled Comcast-Time Warner Cable] transaction, which was in front of us," Rutledge said. "We were about to divest 40 percent of our business."

Charter's cloud-based video interface, he said, is about to roll out in markets including St. Louis and Reno, Nev., after completing a test run in Fort Worth, Texas. 

"It's a backward-compatible interface that's state-of-the art," Rutledge said. "It's completely modern and useful and can be changed with very little development time because all the activity is done through a server-based architecture. And it speaks multiple languages of digital--it can talk to boxes that speak DOCSIS and those that do not. … It's an open architecture that gives us tremendous capability, depending on where the market evolves." 

For the quarter, Charter's overall revenue grew 7 percent, to $2.4 billion.

Rutledge expressed disappointment regarding the termination of the $45.2 billion merger agreement between Comcast (NASDAQ: CMCSA) and TWC (NYSE: TWC) and Charter's associated involvement with that deal. He also said that because of the scuttling of those agreements, Charter's agreement with Advance Newhouse Communications to buy Bright House Communications, announced in March, will now have to be renegotiated.

Asked Friday by investment analysts if Charter might pursue a "skinny" bundling strategy, similar to what was recently introduced by Verizon FiOS (NYSE: VZ), Rutledge said the MSO is considering it but considers the prospect challenging.

"I don't know what's in FiOS' contracts, but there are generally tiering requirements that have been historic to our industry," Rutledge said. "And you talk about being able to find people with [niche packages]. That's not easy. The reality is that most people want the full service."

For more:
- visit this Charter investor relations site

Related links:
TWC adds 30K TV subs in Q1, experiences first growth in five years
Report: Charter's Rutledge and TWC's Marcus set meeting
Report: TWC open to merger talks with Charter

Update: This story was changed to reflect the fact that Charter lost 7,000 subscribers in the first quarter. The initial posting incorrectly had the figure in millions.

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