Charter Churn Rate to Slow

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Subscriber losses at Charter Communications Inc. will continue in the fourth
quarter, but at a slower pace, MSO officials told analysts in a conference call
Tuesday morning.

Charter, which pre-released its third-quarter results Oct. 24, offered few
surprises in its quarterly conference call -- revenue in the period was up 13
percent and cash flow increased 9 percent, as expected.

But on the call, CEO Carl Vogel said subscriber losses -- 86,000 in the third
quarter -- would continue in the fourth quarter to the tune of 30,000 to 40,000
customers.

Vogel also said revenue growth in the fourth quarter would be between 8
percent and 9 percent, with cash flow expected to rise between 4 percent and 5
percent -- well below analysts' estimates.

With the expected fourth-quarter subscriber losses, the MSO is on track to
end the year with nearly 300,000 fewer customers.

Vogel said that of those subscribers who have fallen from the ranks this
year, only about 150,000 of them were due to nonpayment of service. The rest
were likely lured away as a result of aggressive discounts from direct-broadcast
satellite competitors. And he added that the company is putting together a
package to win those customers back.

Vogel said Charter is adding promotional pricing to its product suite -- a
$29.95 basic package for three to six months -- and testing some lower-priced
packages with less content in markets where it sees the highest DBS
competition.

Although Vogel has talked about a low-priced offering before, he offered
analysts a little more detail, stating that it likely would be a 50- to
60-channel analog offering, including local channels and some national networks,
for between $35 and $37 per month. Charter's average price point is between $42
and $45 per month, he said.

Charter's digital and high-speed-data services continued to gain momentum,
with digital customers up 147,000 in the period. High-speed-data customers rose
150,000 in the third quarter.

However, although digital penetration is impressive at 38 percent, Vogel
said, churn rates -- at about 4 percent to 5 percent per month -- are too high.
As a result, he added, Charter 'will likely slow our digital growth in some
markets until we see the necessary improvements in retention.'

Vogel said efforts to keep costs down continue, and capital expenditures for
2003 will be between $1.1 billion and $1.3 billion, compared with $2.4 billion
for 2002.

He also hinted at possible headcount reductions as the company looks to
further slash costs.

Charter currently has about 18,700 employees, or about one employee for every
358 customers. Although Vogel said that ratio is lower than many of Charter's
peers, 'it is a significant cost of our business that may provide an opportunity
for improvement over time as we complete our rebuilds, consolidate headends and
operational centers and complete our billing conversions throughout 2003.'

Charter stock fell 27 cents each, or more than 18.6 percent, to $1.18 per share Tuesday.

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