Delivering its first quarterly earnings call since closing its purchases of Time Warner Cable and Bright House Networks, Charter Communications shed light on the latter, privately held portion of its acquisition.
Across the three newly combined companies, for example, video subscribers were down 152,000 in the second quarter, an improvement over the 170,000 lost in the second quarter of 2015.
Surprising to analysts, however, were the 73,000 losses experienced by Bright House.
“Without historical data to go on, few investors would have guessed that Bright House, with only 1.9 million video subscribers, would have been losing close to 100,000 of them every Q2 for the past couple of years,” said MoffettNathanson analyst Craig Moffett in a note to investors this morning in which he called Bright House “a black box.”
Was Charter caught off guard by seeing so many migratory “snow birds” check out of their pay-TV service in the second quarter?
“I wouldn’t say I’m surprised by anything,” Charter President and CEO Tom Rutledge said, responding to a Moffett question during today’s earnings call. “We have a pretty good visibility into these businesses.”
On a “pro forma” basis, excluding the mergers, Charter grew its second quarter income to $280 million, up from $107 million a year ago.
Discussing the integration plan with shareholders, Rutledge said Charter remains on a course to “in source” its overseas call centers, as well as those for TWC and Bright House, with 20,000 employees being hired in the U.S. over the next two years.
Immediately, he said, the company is about to open a Spanish-language call center in McAllen, Texas that will be staffed with about 600 workers.
He said Charter will embark on a rebrand campaign for both TWC and Bright House in the fall, with TWC subscribers in big cities getting Charter’s two-way Spectrum Guide video product beginning in the middle of next year. The rollout of Spectrum Guide will be completed across Charter’s legacy footprint by the end of this year and across the entire footprint by 2018.
Rutledge also addressed several lawsuits launched by programmers, who have complained that Charter structured its TWC deal to appear as though the latter — with its more efficient licensing deals — actually bought Charter.
“The nature of programming agreements hasn’t fundamentally changed, it’s still a contentious environment,” he said. “We have good relationships without programmers, and I think the litigation is part of the negotiations process in general. It’s going as we thought it would go.”
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