Tags: Charter | cable | growth | CHTR

Charter Strives to Amplify Cable Growth

By    |   Wednesday, 15 February 2012 10:42 AM

Charter Communications (CHTR), a leading carrier of cable television programming, is striving to amplify sales growth, keep debt down and avoid a rerun of its bankruptcy.

The St. Louis, Mo., company was serving 5.2 million customers at the end of September. Its hybrid fiber-and-coaxial cable network passes more than 11 million U.S. homes. But boosting market share has been a challenge.

Charter also sells high-speed Internet access and telephone service but still struggles to cover all of its expenses, though the company has lightened its debt burden and interest expense since entering and exiting Chapter 11 bankruptcy in 2009.

Stiff competition from satellite TV carriers, telephone companies and other rivals has combined with slack economic conditions to flatten revenues, especially from cable customers who buy basic video service.

Charter has raised its cable TV rates but has lost customers, too, restraining revenue growth. Charter's average monthly revenue per customer rose to $134 for basic video service in the January to September period last year, up 8 percent from the same period in 2010. The number of basic video customers dropped during the same period, year over year, by 176,800.

Red ink stains the company's historical financial performance. Charter incurred net losses in every year from 2001 through 2010, about $15 billion altogether over the 10-year period, and lost money again in the first nine months of 2011.

But Charter can generate ample free cash flow. The company's operations generated $1.3 billion of cash in the nine months ended Sept. 30, compared with $1.4 billion during the same period in 2010.

Most stock analysts following Charter in early February recommended buying its shares. The rest had put hold ratings on the stock.

Subscriber erosion

Standard & Poor's analysts Richard Siderman in San Fransciso and Catherine Costentino in New York City assigned issue-level ratings of BB- to $750 million of unsecured notes that two Charter subsidiaries recently sold.

The two subsidiaries, CCO Holdings and CCO Holdings Capital, last month completed the sale of senior unsecured notes due in 2022 at an annual interest rate of 6.625 percent.

"Ratings on Charter continue to reflect aggressive leverage, formidable satellite and telephone company competition, and material basic video subscriber erosion," the S&P analysts said in their Jan. 11 report.

The company's net loss in the January to September period last year was $302 million, compared with a net loss of $152 million during the same period in 2010. Revenues in the nine months totaled $5.37 billion, up about 2 percent, year over year.

Charter next reports on Feb. 27.

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