Cable giant Charter Communications, in which John Malone’s Liberty Broadband owns a major stake and which does business using the Spectrum brand, on Friday reported its third-quarter 2024 results, including latest subscriber trends that showed continued declines in pay TV and broadband but growth in mobile services. But management also used the update to tout improved relationships with Hollywood giants and the value Charter provides by offering subscribers a broad lineup of streaming services in their user packages.
The company, led by CEO Chris Winfrey, disclosed that it lost 294,000 pay-TV subscribers in its latest quarter, compared with a loss of 327,000 in the year-ago period, which was impacted by the company’s high-profile carriage dispute with The Walt Disney Co. The latest figure was made up of 281,000 lost residential customers and 13,000 lost small- and medium-sized business accounts. Charter ended September with more than 13 million total pay-TV customers.
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During the third quarter of 2023, it had lost 327,000 video customers, driven by the impact of the Disney showdown that lasted a couple of weeks. Once resolved, the companies struck a new deal that included such terms as Disney+ being bundled into Charter’s core video offering, as well as the removal of a number of Disney cable channels, including Freeform, Disney Junior and Disney XD.
In its broadband business, Charter lost 110,000 subscribers, compared with a gain of 63,000 in the third quarter of 2023. It ended September with 30.3 million broadband subs. But management said on its earnings conference call that it would have posted broadband user growth in the latest period if the end of the Affordable Connectivity Program (ACP) in May hadn’t provided a hit that is also affecting the broader industry.
Mobile remained a growth business for Charter. It recorded 545,000 net additions in total mobile lines in the latest quarter after adding 594,000 in the year-ago period. That took its total mobile lines count to 9.4 million.
Third-quarter revenue of $13.80 billion was up 1.6 percent over the year-ago period, “driven by residential mobile service revenue growth of 37.6 percent and residential Internet revenue growth of 1.7 percent,” the company said. Quarterly earnings of $1.28 billion rose 2.0 percent, while adjusted earnings before interest, taxes, depreciation, and amortization, another profitability metric, increased 3.6 percent to $5.65 billion.
“We executed well during the third quarter, building on our operating strategy and foundational investments,” Winfrey said. “Now and in the future, we have the best, fully deployed network uniquely capable of delivering seamless connectivity and entertainment, everywhere we operate. We have pricing and packaging that saves customers money with the best products, and a service capability and investment that has yet to be fully realized as a competitive advantage.”
An earnings conference call presentation slide available on Charter’s website on Friday morning showed all the programming giants’ streaming apps that already are or will by early 2025 be included in Charter’s Spectrum TV Select Plus packages, noting that they add up to $78 per month in value. Those streamers include the likes of Disney+ Basic, ESPN+, Paramount+ Essential, BET+ Essential, Max With Ads, Discovery+ With Ads, Peacock Premium, AMC With Ads, and ViX Premium With Ads. Charter’s TV Select/Signature packages are listed as providing a value of $57 per month in terms of streaming apps that are already or will soon be included, while its Mi Plan Latino service showed a value of $19 a month.
“Over the last couple of years, we’ve moved away from bundling video in our offers because the value proposition to customers had fallen,” Winfrey told analysts on Friday’s earnings call. “We still have some work to do to operationalize the new customer proposition … but we’re proud of what we can offer customers, existing and new, in terms of value and utility.”
He added: “Fundamentally, we believe that maintaining and evolving the video business, even if it isn’t growing, helps customer acquisition and retention by making use of our scale and capabilities and adding more value into our unique, seamless connectivity relationship. Video still has positive cash flow and provides us with option value.”
Winfrey continued: “I want to be careful. We are not forecasting video growth,” but he emphasized that early trends show a “significant uplift” in “video sell-in” based on changes made so far.
The CEO also highlighted that recent carriage renewals with the likes of Disney, Warner Bros. Discovery, and Comcast’s NBCUniversal “give customers greater overall flexibility and the ability to include all the key streaming apps from programmers” they want. “That enables us to offer what we now call ‘seamless entertainment,’ a first for the industry, at no extra cost. We also have paths for customers to upgrade to the ad-free version of these apps, and we will sell programmer apps a la carte to broadband and skinny package video customers.”
More broadly, the Charter CEO touted improved partnerships with entertainment giants. “We also have the renewed support from our programming partners to get behind each others’ products and distribution for a healthier video ecosystem and better choice and value for customers,” he said. Winfrey concluded that there was “more to come on this,” with the inclusion of Max with its HBO content in TV Select packages, and “how we plan to promote Max for our broadband customers and vice versa will show how we and the programmers more broadly can support one another with the customers front and center.”
Malone has been exploring a merger of Charter with his Liberty Broadband, which owns a large stake in the cable giant along with GCI, Alaska’s largest communications provider. Liberty Broadband disclosed on Sept. 23 that Charter had sent an initial merger proposal, to which it responded with a counterproposal.
