News

Charter Can’t Stop Subscriber Losses

7/31/2003 12:02 PM Eastern

Charter Communications Inc. reported double-digit cash-flow growth in the
second quarter, but subscriber losses continued to plague the troubled St.
Louis-based MSO.

Charter reported cash-flow
growth of 11% in the second quarter ended June 30 on revenue growth of
7%.

But most of that growth came as a result of dramatic cost-cutting -- it
reduced marketing expenses 33% and cash requirements for the quarter were just
$32 million compared with $515 million in the same period last year.

Charter also reported
that it lost 41,000 basic subscribers and digital subscribers fell by
47,000.

It was the MSO’s sixth consecutive quarter of basic-subscriber losses --
Charter has dropped about 450,000 basic customers during that period -- and the
second consecutive quarter of digital-subscriber losses.

In a conference call with analysts, CEO Carl Vogel attributed the customer
losses to seasonality as college students leave after the school year and
snowbirds move to their summer residences.

On the digital losses, Vogel said Charter is focusing on high-quality
customers.

High-speed-data additions
-- 76,700 in the quarter -- were down 43% sequentially
and 53% year-over-year.

Charter finished the quarter with 1.35 million data subscribers.

In a research report, Fulcrum
Global Partners LLC analyst Richard Greenfield said the declines in basic
and digital customers likely stemmed from the cuts in marketing expenses.

He added that the declines in high-speed-data growth were also likely
impacted by the loss of digital and analog subscribers.

'Marketing expense was reduced 33% in the quarter … Is this a good thing?'
Greenfield asked in his report, adding that marketing cutbacks likely impacted
the fall-off in video penetration.

On the data front, Greenfield estimated that the decline in growth was likely
a combination of several factors.

'We believe that the fall-off in marketing and the drop
in basic subs is hurting data, as well as the traditional seasonality of the
business,' he wrote.

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