Cable operator Charter Communications, in which John Malone's Liberty Broadband owns a big stake, on Thursday reported fourth-quarter financials that exceedes Wall Street estimates, but said it lost video subscribers in the period.
It was Charter's third earnings report since closing two mega-deals, namely the $55 billion acquisition of Time Warner Cable and the $10.4 billion purchase of Bright House. The deals made Charter the second-biggest U.S. cable company behind Comcast.
Recent reports have said that telecom giant Verizon was exploring a possible combination with Charter, led by chairman, president and CEO Tom Rutledge. The talk comes following a big year of deals in the broader industry. Beyond the Charter acquisitions, telecom giant AT&T agreed to acquire Time Warner for $85.4 billion. Wall Street has been wondering whether Verizon would look to buy a cable operator, satellite TV firm Dish Network or a content company.
Charter reported fourth-quarter earnings of $454 million, compared with $130 million on a pro-forma basis in the year-ago period driven by higher income from operations and a $366 million pension revaluation gain. The pro forma figure assumes that Bright House and Time Warner Cable had been part of Charter in the year-ago period as well. Revenue rose 7.2 percent.
The cable firm lost 51,000 residential video subscribers in the latest period, compared with a gain of 118,000 in the year-ago period on a pro forma basis, ending December with 16.8 million residential video subscribers, down 1.3 percent. It added 12,000 video subs in its small and medium business operation, up from 7,000 in the year-ago period.
During the fourth quarter, Charter's residential customer relationships grew by 250,000, versus 359,000 in the prior year period. As the key reason for the year-over-year decline, it cited "elevated churn from Legacy Time Warner Cable historical pricing and packaging." Time Warner Cable had launched promotional offers in 2015.
Rutledge in the earnings report said about the progress of the company's big recent acquisitions: "Our integration is going well. We also continued to grow in 2016, with pro forma customer growth of nearly 5 percent ... In 2017, we remain focused on applying our growth-oriented operating strategy across our new footprints, driving more customer satisfaction, growth and shareholder value."
Discussing possible regulatory changes in Washington under the Trump administration, Rutledge on the earnings call said "a better FCC" was possible under new chairman Ajit Pai. "All [areas of regulation] look to be better for us than under the previous regime." Management also said that possible tax changes would likely be a net positive for the company.