Subscriber Losses Drive Charter Stock to 52-Week Low

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Charter Communications shares plunged to a new 52-week low, after the cable TV operator reported basic subscriber losses of 40,000 in the period, continuing a trend that has plagued the sector.

Charter stock dipped as low as $1.11 per share in early trading on Thursday, rising slightly later in the day to $1.25 each, down 29.8% or 53 cents per share.

Charter CEO Neil Smit said on a conference call with analysts Thursday morning that housing vacancy rates accounted for a portion of the losses. But he added that spillover from stepped up competitive marketing in Time Warner Cable markets in Los Angeles and Dallas – Charter has systems near L.A. and in Fort Worth, Texas – also contributed.

“Our L.A. and Dallas [area] markets account for about 8% of our subscriber base yet were 25% of our analog loss,” Smit said on the conference call. “So we did see some impact in those markets and there was some increased competitive activity there.”

Los Angeles and Dallas have been trouble spots for Time Warner Cable, picked up last year as part of its acquisition of Adelphia and Comcast systems in those areas. In the third quarter, the bulk (66,000) of Time Warner Cable’s 83,000 basic subscriber losses were in those two markets, which have been heavily marketed by satellite TV and telco competitors.

For the period, pro forma revenue at Charter rose 11.2% to $1.53 billion and pro forma cash flow increased 10.6%.

Telephone customers increased by 102,300, digital customers rose by 15,800 and high-speed Internet subscribers increased by 53,000 in the period. While revenue generating unit [RGU] growth at 131,000 was below the 211,000 added in the same period last year, Smit said on the call that Charter is making moves to take greater advantage of the market.

“We are taking steps to regain momentum,” Smit said, addling that the majority of Charter’s net gains in RGUs came in September, suggesting that the fourth quarter could be much better for the company. In addition, Charter is adding HDTV and VOD content, increased its high-speed Internet speeds to 16 Megabits per second and telephony, now available in about 75% of Charter’s total footprint, also should pick up speed.

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