Charter Communications (NASDAQ: CHTR) has become the latest top cable provider to report solid third-quarter video subscriber metrics, adding 12,000 customers during the period.
The performance compares favorably to the 9,000 subscribers Charter lost in the third quarter last year. And it represents a significant turnaround from the third quarter of 2012, when the MSO lost 71,000 pay-TV customers.
Source: Charter
"All the capital we put into our plant, and all the hiring and training, acquisition of test equipment and tools; all these things are paying off in better service and better products, and that's the effect in the marketplace we're seeing," said Charter President and CEO Tom Rutledge during the company's earnings call with investors.
Charter reported third quarter revenue growth of 7.2 percent to $2.5 billion, matching analysts' consensus forecasts.
"We believe that once the Charter/Time Warner Cable/Bright House mergers close -- we expect in the first quarter of 2016 -- Charter will be poised to outperform due to its superior growth profile, financial leverage, and effective management team," said Evercore analyst Vijay Jayant.
Charter also added 131,000 residential broadband users in the third quarter, as well as 97,000 total residential customer relationships.
Company executives briefly addressed Charter's pending acquisition of Time Warner Cable and Bright House Networks, a move that will create the nation's second largest cable provider. The Charter executives said they still believe they're on course for regulatory approval in the first quarter.
More broadly, Charter's Rutledge discussed the macro-economic factors affecting the video market.
"Income growth is down and the population is poorer," he said. "The cost of video, relative to people's incomes, has become a problem."
These factors, combined with content owners aggressively distributing their programming online with emerging SVOD services, has created a rampant wave of improper authentication stealing and sharing, Rutledge said.
"We're seeing a lack of control over content by content companies," he said. "Authentication sharing has reduced demand for video, because you don't have to pay for it. At a core level, they haven't been in the [streaming] business before, and they don't know what they're doing. Now they're sending the signals out themselves, and they've created a problem where they've devalued their own product."
Rutledge and Charter CFO Christopher Winfrey were also asked if Charter had plans to participate in the FCC's upcoming 600 MHz incentive spectrum auction of TV broadcasters' spectrum, and possibly enter the wireless business.
"We're studying the auction -- it's a very awkward situation for us to be in the pendency of our deals," Rutledge said. "But we are exploring it. We don't know how we'd finance it, or what our footprint would be. But we are thinking of the upcoming auction and what to do with it."
For more:
- visit this Charter investor relations site
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Correction, Oct. 29, 2015: This article incorrectly identified Christopher Winfrey as Charter's CEO. He is Charter's CFO.