Charter Communications Inc. (NASDAQ:CHTR) Suffers Biggest Loss In Nine Years On Subscribers Loss Concerns
Shares of Charter Communications Inc. (NASDAQ:CHTR) suffered their worst sell-off in nine years after the company reported bigger than expected loss of video subscribers. The second largest cable provider said it lost 122,000 video subscribers in the first quarter, nearly triple a loss of 43,000 that analysts expected.
Video Subscribers Loss
Shares of the company tumbled by 16% amidst growing concerns about the company’s ability to hold on to TV consumers as most people resort to streaming content. The disappointing results are a stark contrast to last year’s performance where the company posted an increase in video subscribers for the first time in nearly two years.
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In their defense, Charter Communication’s executives attributed the loss to the disconnection of customers who did not pay their bills. The company insists the situation is temporary and that the trend should improve in the second quarter.
However, Charter Communications losses continue to raise serious doubts about its long-term prospects. The losses come barely two years after the cable giant acquired two other cable giants, Time Warner Cable and Bright House Networks that were expected to stabilize the ship.
However, that has not been the case, and it has since emerged that the company is struggling to integrate the three companies into a single pricing and packaging strategy. The cable-TV losses essentially paint a clear picture of how cable giants are struggling to hold on to subscribers as online TV providers led by AT&T Inc. (NYSE: T) DirecTV continue to cause havoc.
Focus On Broadband Business
While the loss is a big concern, Charter is not the only company feeling the pressure in the TV broadcasting business. Comcast Corporation (NASDAQ:CMCSA), the market leader, reported a loss of 96,000 video subscribers in the quarter, worse than 60,800 that analysts were expecting. The loss marked the fourth consecutive quarter that the company has recorded losses in its video unit.
A change in the way people consume content has forced the likes Charter Communications to tweak their core business with the focus now being paid on broadband business. Cable giants are increasingly supporting internet videos by providing high-speed broadband, needed to support streaming services of the likes of Netflix, Inc. (NASDAQ: NFLX). The change has already started to bear fruits, Charter having gained 331,000 internet subscribers in the first quarter.
Q1 Financial Results
Investors sent the stock spiraling lower, despite the company posting earnings per share of 70 cents, up from 57 cents a share reported a year ago. Earnings also beat Wall Street expectations of 55 cents a share.
Net income attributed to shareholders increased to $168 million from $155 million reported last year. Revenues, on the other hand, rose slightly to $10.66 billion compared to $10.16 billion reported a year ago. Q1 revenue also beat Wall Street revenue estimate of $10.62 billion.
During the quarter, the company purchased 2 million shares for approximately $683 million. Cash flows from operating activities totaled $2.7 billion compared to $2.8 billion as of the first quarter of 2017. Charter Communication ended the quarter with a total debt of $69.8 billion.