Strong Q3 For Charter

All-Digital Upgrade On Track For Completion By Year-End
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Charter Communications reported strong third quarter results, with revenue up 8% and cash flow rising by 7%, fueled by high-speed data customer additions.

Charter added 94,000 HSD customers in the period, more than offsetting a loss of about 9,000 basic video customers. The video losses were a big improvement over the prior year, when Charter shed about 27,000 basic video subscribers.

"Charter's strategy to create value by delivering superior products and service, at highly competitive prices, is working. As a result, our customer growth continues to accelerate," said CEO Tom Rutledge, in a statement. "Our growing levels of customer and product penetration, and revenue per household, are generating faster revenue and EBITDA growth. Our new product suite, Charter Spectrum, has been deployed and is designed to further build that operating and financial momentum, delivering greater value to both customers and shareholders."

At the end of the quarter, Charter said it had completed about 80% of its all-digital initiative, deploying about 2 million new set-top boxes. The all-digital project is on track to be completed by the end of the year.

Charter actually released earnigs data two days earlier than expected -- it is still holding a confernce call with analysts on Oct. 31 at 10 a.m. -- mainly because it initiated a $1.5 billion debt offering Wednesday. That offering is tied to the series of swaps, sales and purchases Charter is expected to make with the combined Comcast/Time Warner Cable after that merger is completed. In a research note, MoffettNathanson principal and senior anlayst Craig Moffett wrote that the results offer a critical glimpse into how well the Charter formula is working before the deal is completed.

"Their third quarter results are heartening in this regard: subscriber metrics, revenue growth, and margins are all healthy and growing nicely," Moffett wrote. "Everything (for the moment) is proceeding according to plan."

Investors weren't as enthusiastic. Charter stock was down about 2% ($3.22 each) to $154.18 per share in afternoon trading Wednesday.

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