Cable Operators

Charter Charts Strong Q4

3/02/2010 12:34 PM Eastern

Basic subscribers continued to decline at Charter Communications in the fourth quarter, but the St. Louis-headquartered MSO said strong growth in advanced services and its commercial business helped fuel gains.
Revenue in the quarter grew 3.5% to $1.7 billion and adjusted earnings before interest, taxes, depreciation and amortization rose 2.1% to $633 million, driven largely by increases in high-speed data and telephony revenue. According to Charter, high-speed data revenue rose 9% to $378 million, while telephony revenue climbed 18% to $184 million in the period.

Basic subscribers declined by 57,000 customers in the quarter, although the company said those were mainly video-only customers.

Advanced services customers were on the rise, with Charter adding 43,000 digital subscribers, 52,000 high-speed data customers and 61,000 phone customers in the period.
On the commercial side, revenue was up 12.6% for the year to $116 million.
Interim CEO Mike Lovett said that the bulk of basic subscriber losses in the period were video-only customers, and the majority of those were analog video customers. While he said that some basic losses could be attributable to heavy marketing by satellite and hardwire overbuilders during Charter bankruptcy process -- some of which he hopes to win back -- Charter also is investigating ways to sell high-speed data and phone to non-video customers.
"We continue to look at ways to package those services and in some cases there will not be a video product attached to that," Lovett said.
Charter also is looking tat ways to enhance its existing packages -- it has boosted speeds for its three high-speed data tiers -- and is rolling out DOCSIS 3.0 technology in additional markets this year. Chief technology officer Marwan Fawaz said on the call that DOCSIS 3.0 is already available in 1 million Charter homes and should be available to about 50% of the footprint by the end of the year. Switched digital video, currently in several markets, should be available in about 60% of the footprint by the end of the year.
Charter also said that its stock should begin trading on the NASDAQ Stock Exchange later in the year. The stock has been trading on a when-issued basis on the over the counter bulletin board since December, ranging in price from $39.75 to $29.10 each.

During the call, the company said that should change once it meets certain NASDAQ listing requirements, primarily adding members to its board of directors and to the board's audit committee. On the call, director of investor relations Mary Jo Moehle said that NASDAQ requires that a listed company have an audit committee with at least three independent members -- Charter has two. Charter also needs to elect two additional members to its board of directors -- it currently has nine -- to satisfy Exchange requirements.
Charter lost one board member after CEO Neil Smit resigned, effective March 1, to become president of Comcast Cable Communications. The company is in the middle of a nationwide search for a replacement -- Lovett is filling the role in the interim -- and expects to make a decision quickly.
Moehle said that the new CEO will likely fill one board seat and the other board member would likely also serve on the audit committee.
"When that vacancy is filled, we believe we will be in a position to complete the listing of our Class A common stock on Nasdaq," Moehle said on the call.
Charter stock was trading at $30.10 per share (unchanged) in early trading Tuesday.

September