Charter Communications’ fourth quarter results were driven by robust video and advertising revenues, and a continued increase in data subscribers.
Charter’s residential video subscribers grew by 3,000, as opposed to a loss of 2,000 a year ago, while it added 104,000 high-speed Internet customers in the quarter. Video led the pack by posting $1.13 billion in revenue, which was an 8 percent increase over a year ago.
The advertising sector saw its revenue increase by 29 percent to 107 million in the quarter. Charter’s residential voice subscriber additions for the quarter slipped to 50,000, compared to 56,000 in the same quarter a year ago. On the business services side of the ledger, commercial revenue increased 16 percent.
Charter CEO Tom Rutledge credited the company’s all-digital conversion project, which was wrapped up at the end of the fourth quarter, for the improved fourth quarter subscriber numbers
Also in the fourth quarter, Charter continued the roll out its Charter Spectrum product suite, which includes a 60 Mbps data tier and 200 HD channels. At the end of the quarter, 86 percent of Charter’s residential customers were in its new pricing and packaging plans, excluding subscribers in the former Bresnan properties in Wyoming, Montana and Colorado.
“We recently completed our all-digital transition and the rollout of our more advanced product suite, Charter Spectrum, on plan. We have now unleashed the capabilities of our high capacity two-way interactive network, freeing network capacity we can utilize for years to come,” Rutledge said. “Our fourth quarter and full year 2014 results demonstrate that our new products, combined with our improving service levels, are generating strong market share growth across all of our businesses. Customer growth continues to drive improving financial performance, with reduced capital intensity going forward.”
Charter’s residential customer relationships increased by 73,000 during the fourth quarter and have grown by 5 percent, or 280,000, since the end of 2013.
Charter’s residential primary service units (PSUs) increased by 157,000 during the fourth quarter. In 2014, Charter added 532,000 total residential PSUs versus a pro forma gain of 415,000 in 2013, with 2014 residential video customer losses declining to 17,000 from 109,000 in 2013.
While the subscriber metrics were positive, Charter posted a net loss of $48 million, or .44 cents a share, versus a net profit of $39 million, or .35 cents a share, a year ago.
Revenue in the quarter increased 10 percent o $2.4 billion. Analysts had projected $2.33 billion in revenue, according to Thomson Reuters.
Charter’s operating income for the quarter was $277 million, compared to $244 million the previous year.
Charter’s joint venture with Comcast, Greatland Connections, is on hold while Comcast tries to finalize its $45 billion deal to acquire Time Warner Cable. Last year Comcast and Charter reached an agreement that included selling off 1.4 million Time Warner Cable subscribers to Charter, swapping 1.6 million subscribers between Comcast and Charter and spinning off 2.5 subscribers to form Greatland Connections.
As part of that multi-pronged deal, Charter Communications agreed to pay $7.3 billion in cash for the former Time Warner Cable systems. If Comcast’s deal for Time Warner Cable fails to gain regulatory approvals, Charter is reportedly interested in renewing its pursuit of the nation’s second-largest cable operator.
