Charter Communications matched the rest of the cable industry in revenue and cash-flow growth in the fourth quarter, for the first time in years.
But the St. Louis-based cable operator continued to bleed basic subscribers, mainly because of changes in the packaging and pricing of its digital-cable offering, it said.
Fourth-quarter revenue rose 11.7% to $1.4 billion, and cash flow was up 10.3% to $503 million. This was the first quarter in four years that Charter reported double-digit revenue and cash-flow growth in the same period.
But basic subscribers, a key indication of a cable company's health, fell by 43,000 customers in the last quarter of 2006, an increase from the 40,000 subscribers the company lost in the last quarter of 2005.
In an interview, Charter CEO Neil Smit said the basic-subscriber losses were due primarily to efforts in the quarter to move some programming onto different digital tiers and in some cases increasing the pricing of those packages to be more in line with its peers.
The company was trying to drive further penetration into digital and other advanced services, and to an extent, it worked. Charter added 162,000 video, voice and high-speed Internet customers, combined, in the quarter, an 18% increase over the prior year.
The bulk of the gains were from its telephony product — Charter added 106,000 telephony customers in the period versus just 32,000 in 2005. Charter added 40,000 digital customers in the period, compared to 47,000 in the same period in 2005. High-speed data additions rose to 59,000 in the most recent quarter compared to 76,000 in the same period in 2005.
Although he is not satisfied with the basic-customer losses, Smit said, repackaging the digital product will have benefits in the long-term, noting the growth in subscriptions to different services and a 13.2% increase in the average revenue received from each subscription.
