In today’s release of its 2Q11 and 1H11 financial and operating results, Charter Communications reported significant losses of traditional video viewers.
Residential primary service units (PSUs) decreased by 54,800 in 2Q11 as increases in Internet and phone PSUs were more than offset by a decline in video PSUs. Non-video PSUs grew by 40,800 — nearly double the growth during last year’s second quarter. Bundling over time to maximize retention and customer profitability remains a key strategy, with 61.6 percent of Charter’s residential customers in a bundle compared with 59.2 percent a year ago.
Residential video customers decreased by 79,900 in the quarter, while digital video customers decreased by 4,900. “Seasonality, disciplined customer acquisition and price competition in the face of generally weak economic conditions all contributed to a lower rate of video acquisition which more than offset higher retention levels compared to the prior-year second quarter,” the operator says. “Net video losses continued to be disproportionately driven by video-only analog customers.”
At the end of June, 55.7 percent of Charter’s digital customers used HD and/or DVR services. As a result, video ARPU was $71.40 for the second quarter, up 3.4 percent year-over-year.
At the end of June, 85 percent of the homes passed in Charter’s footprint had been upgraded to DOCSIS 3.0, and 68 percent were SDV-enabled.
The cableco added 18,500 residential Internet customers during the second quarter, and nearly 95 percent have a broadband plan of 12 Mbps or higher. Internet ARPU of $41.76 decreased 1 percent compared with the year-ago quarter, primarily due to the mix of speed tiers. “The tier-mix impact was nearly offset by an increase in home-networking revenues, with more than 20 percent of our Internet customers relying on our home wireless service,” Charter reports.
Enterprise PSUs increased 6,600 in the second quarter to 457,100, 8.3 percent compared with 2Q10. Commercial Internet and phone PSUs increased year-over-year by more than 20 percent. In addition, revenues from carrier customers nearly doubled.
Total ARPU for 2Q11 was $133.84, an increase of 7.4 percent compared with 2Q10, primarily as a result of increased bundle and advanced services penetration along with growth in Charter’s enterprise business. For the first half of 2011, the operator lost 12,100 total customer relationships compared with 45,900 in 2010, “reflecting the early benefits of our strategic investments partially offset by disciplined customer acquisition,” Charter says.
"We delivered another solid quarter of adjusted EBITDA growth and substantial free cash flow," notes Mike Lovett, Charter’s president and CEO. "We made significant progress on our longer-term strategic initiatives and are just beginning to see the benefits of these investments. We continued to drive accelerated growth in our commercial business and higher penetration of our superior Internet product, and we are confident that the investments we are making to enhance our products and customer service are setting us up for long-term success.”
“For the remainder of 2011, we will continue to focus on our key strategies of enhancing our customers’ experience, leveraging our Internet advantage while we develop next generation video services, and aggressively pursuing growth in our commercial business," he concluded.
To read the entire financial report, click here