No, Charter Communications’s 102,000 net video additions in the second quarter isn’t a sign that the rapidly quickening dynamic of linear pay TV cord cutting has magically disappeared.
“The secular trends haven’t changed,” Tom Rutledge, Chairman and CEO for the No. 2 U.S. cable company, told equity analysts Friday. “We've always said that we thought it was possible to grow video if our overall relationship growth was high enough.” (A transcript of the call was provided by Seeking Alpha.)
Charter added an enormous 755,000 customers through second quarter promotions billed as connected disadvantaged students and families, as well as small business owners, to the internet during the pandemic. Charter said 149,000 customers signed up through the company’s Keep America Connected promotion also chose to bundle video.
Charter didn’t cut off customers who were unable to pay their cable bill during the second quarter, limiting churn.
“If you grow faster than that rate of decline, then you create video growth,” Rutledge said. ‘And that's really what's happened here.”
It was the first time in three years that Charter had reported video customer gains. The company lost 70,000 Spectrum TV customer in the first quarter and 141,000 in the second quarter of 2019.
Rutledge conceded that at least part of the second quarter growth was achieved through a skinny bundling strategy, enticing broadband customer with economy-sized video products in some markets. But contract limitations with programmers limit just how much Charter can exploit these opportunities,” he said.
“The skinny packages have limits in terms of what we can penetrate with because of the way the contract language works, our programming deals and the minimums that are required in the--the minimum distribution required in a big bundle,” Rutledge said.
So will Charter bundle third-party vMVPD services like YouTube TV, Philo and fuboTV, as other cable operators have
“I think you'll see us selling more and more packages of OTT product that we don't necessarily own but more on a consignment basis or on a--potentially even a packaging basis,’ Rutledge added.
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