Charter results reflect ‘recession-proof’ cable industry

(Telephony) Reflecting what industry pundits call cable’s “recession-proof” nature, Charter Communications today reported first-quarter results on the high end of previously stated guidance, with digital video and high-speed data service additions exceeding company expectations.

Charter, the nation’s fourth-largest MSO, reported almost a 10% increase operating cash flow to $387.9 million, compared with $353.7 million a year ago. However, the company also reported bigger losses, which it attributed to more than $10 billion in acquisitions since its IPO in November 1999. The net loss was $280.7 million, or $1.20 per share, compared with $180.7 million, or 81 cents per share, a year earlier.

Jerry Kent, Charter’s president/CEO, was upbeat about the company’s performance and direction.

“Consumer demand for advanced services is very robust,” Kent reported.

Charter added 274,000 digital customers--averaging about 21,100 per week--which was 18% higher than the previous year’s average and is “still on target to achieve digital penetration of over 30% by the end of the year,” he said.

Kent also said high-speed data service is now available to about 55% of Charter’s homes passed. The MSO is adding 7,000 data customers per week and ended the quarter with 343,000 data customers.

Growth has been so positive that, in some markets, the company “has done some node splits,” said Dave Barford, executive vice president/chief operating officer.

Charter builds nodes with six dark fibers and no more than 500 customers in a node, Barford said. The splits allow those subscribers to continue to receive the same, or better, data speeds based on contention.

Kent emphasized that the company would continue a tiered approach to high-speed data service, offering 256 kbps for $24.95 to $29.95 per month and 512 K/ps at $34.95 to $39.95. Part of that effort is also reflected in the retail marketplace, where Charter is hawking its cable modems.

“Consumer-electronic retailers have dramatically changed their views toward broadband companies over the last year and are more open to doing business with us without requiring an evergreen stream,” Kent said.

Charter has deals with CompUSA stores in St. Louis “and select other areas,” he said.

The MSO also claimed success in winning back satellite customers, but only in markets where the company has a strong multi-service presence.

“We had at least 12,000 satellite customers convert to Charter digital cable in the first quarter alone,” Kent said. “I believe that rate of conversion is going to do nothing but accelerate.”

Charter experimented with “dish-buyback programs” last year, he said.

“It’s important to note it’s not effective in markets where you don’t offer digital and certainly not effective where you don’t offer digital and data,” Kent said. “You have to have the digital product in order to provide a competitive offering and data just provides additional glue as you discount the bundled package together.”