Charter Sub Losses Down, Settles with Allen

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Charter Communications Inc. managed to pare down basic-subscriber losses in the third quarter and removed an overhang on its stock by settling a two-year-old dispute with its chairman, Paul Allen.

Charter lost about 36,000 basic subscribers during the third quarter, down from 42,000 in the second quarter and 58,000 in the same period last year.

In a conference call with analysts, CEO Neil Smit said the improvement in basic subscribers was due to the MSO’s new focus on targeted and retention marketing and improved customer service.

Charter fared better on the new-services front: It added 98,400 high-speed-Internet customers, 75,800 digital subscribers and 22,100 telephone customers.

For the period, revenue was up 6.5% to $1.3 billion and cash flow was essentially flat at $469 million.

Smit said on the call that while expenditures for the new marketing and customer-care initiatives have had a negative impact on cash flow in the short term, they are “necessary to better position Charter for sustainable growth.”

Charter also said it had settled a dispute with Allen regarding his interests in a holding company, CC VIII. As part of the settlement, Allen and his investment company, Charter Investments, will retain a 30% interest in CC VIII. The remaining 70% will be split between CCHC LLC, a new subsidiary wholly owned by Charter Communications Holding Co., and Charter HoldCo, in exchange for subordinated notes.

In a research note, UBS Warburg LLC cable debt and equity analyst called the settlement a positive for Charter because it helps with its liquidity.

Charter stock was up six cents each to $1.26 per share in Tuesday-afternoon trading.

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