Charter Shares Drop as Video Sub Losses Accelerate

Charter Communications stock closed down 12 percent Friday at $263.32 after the company reported accelerating video losses. CEO Tom Rutledge in a Q1 earnings calls said integration of Charter with Time Warner Cable and Bright House Networks "is going quite well and pretty much as planned." But, he added, "It has lumpy aspects." He said a move to an app-based video delivery system should help cut capital costs. He said there's still potential for video growth, but little profit margin in the video business, so such growth is "relatively immaterial" to the company's future. Charter said it ended the quarter with: 16.4 million residential video customers, down 122,000; 22.87 million residential internet customers, up 331,000; and 10.37 million residential voice customers, down 52,000. Q1 a year ago, it had residential video losses of 100,000. It said Q1 revenue was $10.7 billion, up 4.9 percent. Rutledge said 20 percent of legacy TWC and 60 percent of legacy BHN footprints remain analog, though the company's all-digital effort should be done by year's end. He said 45 percent of Charter's footprint has access to 1 Gbps, and such service should be virtually universal by year's end. He said the company is raising minimum speeds to 200 Mbps at no additional cost faster than planned. Mobile service should launch in the middle of this year, with the company doing a field trial, and modifying several hundred of its retail stores, he said. He said Charter is testing in bands including 3.5 GHz and 28 GHz, and it's working toward a combination of small cells with its existing terrestrial network and DOCSIS products to offer high-capacity low-latency fixed wireless and mobile services. Chief Financial Officer Chris Winfrey said churn is up due to a focus on disconnects of non-paying subscribers, but sales are up and by the end of Q2 or early Q3, those disconnect numbers should taper off.