Deeper Dive—Charter’s video subscriber growth may be an anomaly

Charter van
CEO Tom Rutledge said that when broadband grows at such an elevated rate, it’s bound to have a positive impact on services like video and voice that often get packaged in with internet. (Fierce Video)

Charter made a lot of people do a double take when it reported positive video subscriber growth this morning, something it hasn’t done in years.

The company added a net 102,000 video subscribers in the second quarter while its competitors and peers like AT&T and Comcast witnessed continued attrition within their respective video subscriber bases.

Charter added a whopping 755,000 new residential and SMB customer relationships largely thanks to pandemic-related promotions. In March the company introduced the Remote Education Offer providing free Spectrum Internet for 60 days to households with K-12 and/or college students as well as educators that did not already have Spectrum Internet service. Charter also participated in the FCC’s Keep Americans Connected Pledge through June 30, 2020, pausing disconnects and collection efforts for residential and SMB customers impacted by COVID-19. The company also provided a seasonal plan at reduced rates to SMB and enterprise customers that have temporarily closed or because these customers have reduced their service offerings to their own customers.

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The promotions and other factors helped lead to massive broadband growth during the quarter for Charter. CEO Tom Rutledge said that when broadband grows at such an elevated rate, it’s bound to have a positive impact on services like video and voice that often get packaged in with internet.

“The secular trends for video haven’t changed. We’ve always said we thought it was possible to grow video if our overall relationship growth was high enough. The ratio of video customers to overall customers, it is continuing to decline, but if you grow faster than that rate of decline, then you create video growth,” Rutledge said during today’s earnings call. “That’s really what’s happened here… It’s that simple.”

He said that Charter’s overall video subscriber growth has declined faster than he thought it would over the past several years and that that trend has not changed. So, it’s possible and perhaps likely that Charter will swing back to video subscriber losses in the third quarter, unless it can keep up its blistering customer relationship growth pace.

Despite the rare growth in the video subscriber base, Charter’s video revenues still decreased slightly, which the company attributed in part to a higher mix of lower priced video packages.

Rutledge said Charter’s skinnier channel packages helped drive some growth in the video subscriber base. Going forward, Charter said it will likely branch further out into offering third-party OTT services bundled with broadband. Rutledge said he thinks Charter will end up selling more and more packages of OTT products, that it doesn’t necessarily own, on a consignment basis or potentially on a packaging basis.

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