Charter Communications surprised the cable community by actually adding video customers in Q2 during a pandemic, but chairman and CEO Tom Rutledge told an industry audience that the increases were no fluke and in fact are quite sustainable.
Charter added 102,000 video customers in Q2, a time when other larger cable operators were shedding large numbers of pay TV subscribers as the pandemic forced some homes to opt for higher data speeds and a streaming video connection. But Rutledge, speaking at the virtual Goldman Sachs Communacopia conference Wednesday, said that a combination of good service and a substantial number of customers defecting from satellite TV -- DirecTV lost about 886,000 subscribers in the same period -- helped Charter reverse the trend.
Rutledge attributed the video growth to the strength of Charter’s Spectrum broadband offering -- it added 825,000 broadband customers in Q2, a record -- and the rapid decline of satellite TV. Satellite TV service providers DirecTV and Dish Network lost about 1 million subscribers in Q2 alone, and nearly 8 million customers since Q3 2018, according to MoffettNathanson.
“We still have a macro trend of cord-cutting going on, meaning people have a hard time paying for the fat bundle of services, but we’re selling other products as well,” Rutledge said.
“We look at our future in video as more of a video store of a whole range of kinds of products, including tiers, sports channels, traditional video products, linear products, AVOD products and making that an easy transaction for the customer and make that part of the overall connectivity experience," he continued. “We think we can continue to do that and that is the fundamental aspect of video that we’re interested in.”
Rutledge said the health of the video business will continue to depend on the sustained growth of broadband -- he noted that satellite TV customers that switch to Charter often buy a broadband connection too. And broadband growth is showing no signs of letting up.
"As they come loose from their satellite relationships, they are reevaluating their broadband connections as well,” Rutledge said.
Rutledge also was optimistic about the rapid growth of Charter’s Spectrum Mobile wireless service. Spectrum Mobile added about 325,000 customers in Q2, ending the period with 1.7 million subscribers.
“I think it will accelerate,” Rutledge said of Spectrum Mobile’s growth. “I think we’re just getting going.”
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