Cable Operators

Charter: Strong Packaging Staves Off Promotional Defections

CFO Says Product Stickiness Keeps Customers Loyal Even as Prices Rise 2/26/2013 11:41 AM Eastern

Charter Communications isn’t sweating out a prolonged roll-off if its customer base once promotional periods expire, because it has confidence in its new product packaging scheme and the quality of its service, chief financial officer Christopher Winfrey told an industry audience Tuesday.

While other operators have seen customer defect after promotional periods roll-off, Winfrey, speaking at the Morgan Stanley Technology, Media and Telecommunications conference in San Francisco, said that Charter’s new product packaging should minimize losses, even as the company implemented a 2.3% rate increase in the first quarter.

Last year Charter revamped its product packages, eliminating its lowest broadband tier and modifying video offerings, including increasing the number of HD channels.

Winfrey said keeping subscribers loyal after promo periods end is a combination of training customer service reps and the customers themselves – he noted that many Charter customers were used to negotiating better deals come renewal time.

“You need to have confidence in the quality of the product you’re putting into the home, confidence in the service you’re providing and confidence in the competitiveness of what that customer now has inside the home and their inability to fundamentally replicate that in a competitive offer elsewhere.” Winfrey said.

Winfrey also offered some Insight into Charter recent agreement to acquire Optimum West, the former Bresnan Communications systems.

“These are Charter markets,” Winfrey said of Optimum West’s Colorado, Wyoming, Utah, and Montana footprint. Winfrey reiterated Charter CEO Tom Rutledge’s comments on the MSO’s earnings call that Bresnan has been implementing the strategies Charter is just now beginning to introduce. While Bresnan could offer a glimpse into Charter’s future, he cautioned analysts not to plug the smaller operation’s financial growth  growth into their Charter models just yet.

Morgan Stanley media analyst Ben Swinburne had estimated that the Bresnan systems grew cash flow by 16% in the first three quarters of 2012.      

“It’s an interesting data point, and it has a lot of relevance, but it’s not a one-for-one comparison,” Winfrey said, pointing to Charter’s much larger operation – it has about 4 million video customers compared to Bresnan’s 304,000.

March