Charter Q2 Earnings Show Surprise Bump In Video Subs; CEO Tom Rutledge To Extend Contract

Charter Communications

Charter Communications – the nation’s second largest cable company with about 30 million subscribers – topped Wall Street estimates with a quarterly earnings report that saw strong growth in Internet and wireless and surprising resiliency in video.

CEO Tom Rutledge told analysts on a conference call that he will be extending his contract, which expires in April, 2021.

“I intend to continue to be here and the board would like me to stay,” Rutledge said in response to a question. It hasn’t been announced and he didn’t give details.

The shares were up a hefty 3.3%.

As expected, the company ended the June quarter with more Internet subscribers, 26.3 million — up 8.5% with 842,000 net new additions. But Charter also bucked the cord-cutting trend by adding about 100,000 new video subs.

“There probably was a little less downgrading during the period because so many people were stuck in front of screens at home,” he said. The secular trend of declines in cable video haven’t changed he said but if you grow fast you can still get ahead of it. Charter last quarter managed “to grow faster than the rate of decline.”

In part that’s from new packages it offered to get people through COVID-19 some discounted or with free add-ons that expired June 30. But executives said the company has retained a significant number of those into July with contracts that are the same as all Charter customers.

Rutledge cautioned that the retaining those subscribers and others depends in part on government stimulus that helped keep households solvent through the worst of COVID-19 but are set to expire today. Congress and the Whilte House are hashing out a new set of relief measures but the process has been contentious and slow.

Charter said it waived $85 million in overdue balances in the quarter for customers who couldn’t pay.

Asked about Charter’s regional sports networks (RSNs) which host Los Angeles Dodgers and Lakers games, executives didn’t opine on the return of sports in general but did say that if the company ends up getting any rebates or cash back on licensing or programming costs it would pass those on to its customers.

In mobile, Charter added 325,000 new lines and as of June 30 had 1.7 million mobile lines through Spectrum Mobile, which is available to all new and existing Spectrum Internet customers – the trade name for Charter’s service.

Net income of $766 million was more than double $314 million from last year on revenue of $11.7 billion, up by 3.1%.

Ad revenue, which is mostly local, was off 1.7% from the year before at $1.59 billion. Execs saw that picking up as political is added to the mix.

Internet revenue grew by 10.4% to $4.5.

Video revenue of $4.4 billion was down 0.4%

Second quarter capital expenditures totaled $1.9 billion and included $125 million of mobile-related spend. Free cash flow was $1.9 billion compared to $1.1 billion in 2019.

This article was printed from https://deadline.com/2020/07/charter-q2-earnings-surprise-bump-video-subs-ceo-tom-rutledge-extend-contract-1203000626/