Charter Posts Wider First-Quarter Loss on Deal Costs, Loses 7,000 Video Subs

The cable company continued to grow its broadband and telephony subscriber figures as revenue rose 7.3 percent.

Cable operator Charter Communications, in which John Malone's Liberty Broadband owns a big stake and which is expected to hold deal talks with Time Warner Cable in the near future, reported weaker-than-expected first-quarter financials on Friday as it lost residential video subscribers.

The company, led by CEO Tom Rutledge, reported a quarterly loss of $81 million, compared with a year-ago loss of $37 million. The result came in below Wall Street forecasts. Charter said the loss "reflects $86 million of interest expense related to the Comcast transactions financing and $13 million of transactions costs related to the Comcast transactions in other operating expenses," which were only partially offset by other factors. Charter had struck a deal with Comcast to buy some cable systems from it after Comcast's planned takeover of Time Warner Cable, which the cable giant recently had to abandon.

Charter said its first-quarter adjusted earnings before interest, taxes, depreciation and amortization grew by 4.2 percent to $800 million, or 7 percent when excluding Comcast transactions-related costs of $21 million. Revenue rose 7.3 percent to $2.36 billion.

It lost 7,000 residential video subscribers in the latest period, ending March with 4.15 million residential video subscribers. In the year-ago period, the company had added 18,000 residential video customers.

Overall residential customer units increased by 4 percent from the year-ago period to 5.927 million. It added 160,000 residential subscriber units in the first quarter, down from 206,000 in the year-ago period, as it signed up 125,000 broadband users, down from 136,000, and 42,000 telephony customers, down from 52,000. Overall residential subscriber relationships rose by 86,000, which includes people taking more than one product.

After Comcast abandoned its plans to acquire Time Warner Cable, Charter is seen as a possible deal partner for the latter. TW Cable management on Thursday focused a conference call on touting the company's strong operating momentum instead of discussing deal options, though.

"Our first-quarter results continue to demonstrate the sustainable growth trajectory of our operating strategy to provide high-quality products and service at an attractive price," said Rutledge. "Our continued customer relationship growth reflects the growing value and utility of our offerings and higher levels of customer satisfaction. Our subscriber and revenue growth, combined with declining capital intensity, is leading to meaningful free cash-flow growth."

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