Charter Chugs Along in Q28/07/2012 2:24 PM Eastern
Charter Communications returned to basic customer losses in the second quarter, but initiatives taken up by its new CEO seem to be beginning to take hold.
Charter lost 72,000 basic video customers in the second quarter, better than the 83,000 it lost in the same period last year. The loss comes after Charter gained 27,000 basic video customers in the first quarter.
Revenue for the period rose 5% to $1.9 billion and cash flow increased 2.7% to $693 million.
Charter added 37,000 high-speed data customers and 12,000 voice subscribers in the period. Non-video customers increased by 56,000 in the period and now number close to 1 million homes. On a conference call with analysts to discuss results, Charter CEO Tom Rutledge said those customers represent a future upsell opportunity for the video product. But he added he sees more upside in those homes inside the footprint that do not buy any services from the cable operator. Charter has the lowest residential video customer penetration in the industry at about 34%.
Rutledge started several initiatives after taking the helm officially in February, among them a focus on new programming packaging, including beefing up HDTV offerings, and revamping its high-speed Internet offerings.
Charter has increased its HD channels to more than 100, and eliminating lower-tier high-speed data service - the introductory speed is now 30 Megabits per second. The result has been a higher uptake of its triple play offering - Rutledge said triple play sell-in doubled during the quarter - and more efficient operations.
And the CEO sees those changes to the video product as a tool to help it win back customers from satellite competitors.
"We have an inherently superior video product than our competitors in most places, a superior voice product and a superior data product," Rutledge said. "Put those all together in packaging that is compelling it actually creates a value proposition for the consumer based on what they are actually paying and we think we have an opportunity to grow our business for years to come."