Charter Loses 226,000 Pay TV Subs in Second Quarter
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Cable giant Charter Communications, in which John Malone’s Liberty Broadband owns a big stake, reported its second-quarter results, including latest subscriber trends, on Friday.
The company, led by chairman and CEO Tom Rutledge, lost 226,000 pay TV subscribers in its latest quarter, compared with a loss of 50,000 in the year-ago period.
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Charter’s broadband user growth turned into a decline in the second quarter as it lost 21,000 customers after gaining 400,000 in the year-ago period.
Rutledge, during a morning analyst call, commented on the company navigating a recessionary threat to the domestic economy and its impact on consumer spending. “We remain well positioned, with growth driven by offering value-rich packages that differentiate us from our competition with prices that customers can afford, regardless of the economic environment,” he said.
Cable, mobile and broadband Internet providers have faced consumers and small and medium sized businesses bouncing back from the COVID-19 crisis, only to face inflationary pressures as another economic downturn looms. “Our doom and gloom question?” Rutledge said at one point when beginning to answer an analyst question about how Charter was responding to rising inflation in a slowing U.S. economy.
“We can operate in a difficult economic environment and we can make our products valuable to consumers. I’d rather operate in a normal environment, but we have pretty good assets and pretty good opportunities to be successful,” Rutledge argued. Charter execs pointed to inflationary pressures on labor costs and bad debt expenses edging up as the operating backdrop for the company. At the same time, customer churn is low, the company contended.
During the latest quarter, broadband customers in its residential and small- and medium-business segments increased by 38,000 on a combined basis when excluding 59,000 “disconnects related to the discontinuation of the Emergency Broadband Benefit program and additional requirements of the Affordable Connectivity Program.” The company had previously warned that those changes to government programs helping consumers get Internet services would cause a 60,000-70,000 user drag in the period.
On Thursday, Comcast had reported that its broadband user base stalled in the second quarter.
Asked earlier this year why Charter seems to be outperforming its peers in terms of video subscribers, Rutledge said: “We try hard, for one thing. And we try to [add] value, where we can, for the consumer.” He added: “There is still opportunity in video. And one of the things we have had success with is the creation of additional packaging and the mix of video products that we actually sell to consumers.”
Cable operators’ stocks have been hit hard in recent months amid challenges in broadband, which has long been a growth business, with some Wall Street analysts predicting that some cable firms could lose broadband users in the April-June period.
As of the end of June, Charter had nearly 30.25 million total broadband customers and nearly 15.50 million total video subscribers.
Charter also added 344,000 mobile phone lines in the second quarter, up from 265,000 additions in the year-ago period. It ended June with 4.3 million total mobile lines.
