CHTR
The beat that didn’t really feel like a beat
Charter Communications walked into earnings season with a respectable headline: revenue of $13.53 billion and adjusted EPS of $10.66 both topped Wall Street’s guesses. But the market basically said, “Cool story—what about the customers?” and focused on the 172,000 internet subscribers the company lost in the quarter.
Broadband is still the drama queen
That subscriber loss was worse than the 116,000 Charter gave up a year ago, and it’s the kind of number that makes investors wince. Why? Because broadband is the engine, the cash machine, the whole thing. If the engine keeps sputtering while fixed wireless and fiber keep nipping at your heels, the earnings beat starts to look like a victory lap in a rainstorm.
A few things did help soften the blow:
- Video losses narrowed to 21,000, helped by bundle tweaks and added streaming perks
- Mobile kept growing, with 406,000 lines added in the quarter
- Management says bundling and better service should eventually stabilize broadband growth
The Cox deal and the debt shuffle
Charter also said its $34.5 billion acquisition of Cox Communications is still on track to close in mid- to late August. That deal matters because scale is the name of the game in cable land, and Charter is clearly trying to bulk up before the competition eats more of its lunch.
Then there’s the balance sheet soap opera: the company laid out a debt exchange plan that could involve repurchasing around $10 billion of old bonds, buying another $9.7 billion of subsidiary debt, and issuing up to $3.5 billion in new bonds. Translation: Charter is reshaping the debt stack while trying to keep the market from panicking about leverage.
Big picture
Yes, Charter beat estimates. But investors aren’t exactly handing out gold stars for a company losing broadband customers in a supposedly defensive business. Until Charter proves the subscriber bleed is slowing, every earnings report is going to feel less like a celebration and more like a live stress test.