Rutledge: Charter Turning Corner on Unit Growth

Heavy promotions at former Time Warner Cable systems were the main culprit in Charter Communications’ disappointing first quarter basic video customer losses, but chairman and CEO Tom Rutledge said the cable operator has “turned the corner” in terms of unit growth.

Charter lost a total of 100,000 residential basic video customers in the first quarter, well above what most analysts were expecting. Charter blamed most of those losses on heavy promotions at former Time Warner cable systems. Charter completed its purchase of Time Warner cable and Bright House Networks in May 2016.

At the MoffettNathanson Media & Communications Summit in New York Wednesday (May 17), Rutledge said that many of those TWC promotional bundles are coming to an end.

“Time Warner [Cable] wanted to make a video number,” Rutledge said at the conference. "There were data packages that were discounted that cost less if you took video than if you didn’t. A lot of them are churning out. A lot of them were basic-only. On the margin, in the last year, they were selling 40% of their connects basic-only.”

Rutledge said TWC had “90,000 different promotional offers” in the period leading up to the close of those deal. He said customers only needed to call into the system to receive a generous discount.

“It was a Turkish bazaar,” Rutledge said. “You’d call in, bargain, and they would invent a package.”

He said those deals were “exploding packages,” meaning they converted to full price after the promo period ended, leaving many customers reeling from sticker shock.

“We, up until recently, were unable to see that or intervene in that prior to it happening,” Rutledge said. “We’ve already turned the corner in terms of unit growth, and we are selling more on a year-over-year basis than we were within TWC and the whole company.”