Charter Communications' plan to apply its operating model to the integration of Time Warner Cable after its $49 billion purchase of the cable giant in 2016 “appears to be working as planned,” said Jefferies analyst Scott Goldman in a note to investors following Charter’s fourth-quarter earnings report Friday.
Charter reported 3.2% revenue growth for Q4 and does appear to be turning the corner on its integrations of not only TWC but also the Florida-situated Bright House Networks.
In a video, Goldman called a narrow gain of 2,000 subscribers amid furious cord-cutting “encouraging.”
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At TWC, he noted, “it appears that the elevated churn and integration headwinds are abating.” As Charter deepens its penetration of Spectrum pricing into the acquired TWC systems, he added, “trends should continue to improve, with some lumpiness to be expected. Broader product launches such as Stream TV, World Box, Spectrum Guide and 1 Gbps broadband should help.”
Barclays had estimated that Charter would report losses of around 60,000 pay TV users for the quarter.
“The beat on video subs came from legacy TWC’s base, where decline rates moderated meaningfully,” said Barclays analyst Kannan Venkateshwar.
Charter said it had converted 49% of the TWC base to Spectrum as of the end of the fourth quarter, up from 41% at the end of Q3.
Goldman—who kept Charter at “hold” status—cautioned that the cable company’s wireless investment could put pressure on the improving margins. Charter said it was on track for a midyear launch of its anticipated mobile product, but it didn’t disclose a lot of information otherwise.