Charter Defies Cord-Cutting by Gaining Cable-TV Customers
July 31 2020 - 2:19PM
Dow Jones News
By Lillian Rizzo
Cable operator Charter Communications Inc. managed to buck the
cord-cutting trend during the second quarter, adding thousands of
pay-TV customers.
Charter, which operates under the Spectrum brand, said on Friday
it added 102,000 pay-TV customers, the first time since December
2017 it didn't suffer losses in the segment. This came as Charter
added 842,000 broadband customers. Some of the sign-ups were
related to cheaper cable packages and a coronavirus-related relief
program that offered free 60-day internet to some new
customers.
Charter's stock was 2.8% higher in midday trading.
Traditional pay-TV subscribers in recent years have been
migrating to streaming services such as Netflix Inc., Walt Disney
Co.-controlled Hulu, and Amazon.com Inc.'s Prime Video. During the
second quarter, AT&T Inc.'s DirecTV satellite business lost
886,000 U.S. premium TV subscribers, and another 68,000 online-only
channel bundles; Comcast Corp. said it lost 477,000 pay-TV
customers and expects to lose roughly the same in the third
quarter.
Charter Chief Executive Tom Rutledge on Friday's earnings call
said this wasn't a sign of the trends changing, however.
"Nothing has changed to the secular trends, although there was
probably a little less downgrading during the period because so
many people were stuck in front of screens at home," Mr. Rutledge
said. "But I don't think the overall trend changed...We grew faster
than the rate of video decline, and it's that simple."
Charter's second-quarter revenue increased 3.1% to $11.7
billion, compared with the year-earlier period. Net profit was $766
million, up from $316 million.
When stay-at-home orders were instituted in March, Charter
offered 60 days of free internet service to new customers with
students or educators in the household, available through June 30.
Companies also agreed not to disconnect customers unable to pay
their bills due to coronavirus-related economic challenges, as part
of the program instituted by the Federal Communications
Commission.
During the first quarter, 119,000 people signed up for the free
60-day offer, and "rolled off as either paying customers or
disconnects," in the following months, Chief Financial Officer
Chris Winfrey said. In the second quarter, 329,000 people signed up
for the free offer, and 160,000 still remained on the offer at the
end of June.
Charter said the majority of new customers that signed up for
the free 60-day internet took flagship internet speed plans, and
nearly 50% added on an additional service, such as pay-TV, mobile
or landline phone, for which they were billed.
The company, which started offering mobile in 2018, added
325,000 customers during the second period, 7,000 of which were
added alongside the free-internet promotion. There are now 1.7
million Spectrum Mobile customers in total.
New customers even signed up for landlines: Charter added 38,000
landline customers during the second quarter, compared with a loss
of 207,000 in the same quarter last year.
The company said it forgave debts of some customers with overdue
payments and waived about $85 million from its balance sheet,
considered a reduction of revenue in the second quarter. Most of
the customers who signed up for the promotion are either still
under the free period or now paying their bills in full, Mr.
Winfrey said Friday.
"We helped approximately 700,000 customers who indicated
economic hardship due to Covid-19," which included residential and
small business, since March, Mr. Rutledge said.
Charter had more than 26.3 million broadband customers and
nearly 15.7 million pay-TV customers at the end of the second
quarter. Charter acquired Time Warner Cable Inc. in 2016, making it
one of the largest broadband and pay-TV providers in the U.S.
Write to Lillian Rizzo at Lillian.Rizzo@wsj.com
(END) Dow Jones Newswires
July 31, 2020 14:04 ET (18:04 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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