Comcast, Charter describe strategies to offset video sub losses

May 8, 2018
The first quarter of 2018 was an "interesting" one for video at two of the biggest U.S. cable operators. Comcast saw a net loss of 96,000 video customers and legacy Charter lost 32,000 residential video customers in the quarter versus a loss of 13,000 a year ago. Charter's ex-Bright House video customer numbers were flat during the quarter versus a gain of 13,000 last year.

The first quarter of 2018 was an "interesting" one for video at two of the biggest U.S. cable operators. Comcast saw a net loss of 96,000 video customers and legacy Charter lost 32,000 residential video customers in the quarter versus a loss of 13,000 a year ago. Charter's ex-Bright House video customer numbers were flat during the quarter versus a gain of 13,000 last year.

But at the same time, the news was positive on the Internet front as well as with mobile efforts. Comcast ended the first quarter with 577,000 Xfinity Mobile customer lines. Meanwhile, Comcast and Charter announced a new operating platform partnership that will help them get to scale more quickly (see "Comcast, Charter partner on mobile platform").

Charter's CEO Thomas Rutledge said during an analyst call to discuss first quarter results that one of his company's primary objectives during the quarter was to prepare to launch mobile services. The company is on track to offer mobile by the middle of the year as part of an MVNO agreement with Verizon. Charter said 5,000 of its employees have been participating in a field trial, and the company is building sale channels, including modifying several hundred retail stores.

"Ultimately, the goal is to use our mobile service to attract and retain cable bundle, multi-product customers," Rutledge said on the call. He also mentioned the Comcast partnership and said this will accelerate ability to scale by "stepping into a proven MVNO back office platform."

Charter also has raised minimum Spectrum Internet speed to 200 Mbps in "a number" of additional markets and has "compressed" capital spend to raise speeds and launch DOCSIS 3.1 across its footprint (see, for example, "Charter DOCSIS 3.1 gigabit nears half of footprint").

Comcast pivots

Back on the video front, Comcast says it has "pivoted" X1 to be a whole-home platform for aggregating content, not just linear TV. The company has added Sling TV's international programming to its slate of YouTube, Netflix, and Pandora. X1 is also a dashboard for WiFi connectivity and home automation.

As a result, X1 has become the most used platform for Netflix viewing among Comcast customers, and the company recently announced it will package Netflix with TV offers, which will add a revenue source for the operator.

Charter's Rutledge, meanwhile, said that the whole company will be fully digitized by the end of the year as it continues to deploy its two-way digital set-top boxes.

"While all digital is on track, it is disruptive both to our operations and to our customers. It creates a large volume of short-term activity, which is inconsistent with our long-term operating strategy," Rutledge said.

Sky's the limit?

Merger and acquisition news for the quarter includes Comcast's offer for Sky (see "M&A: Comcast reaches for the Sky"). It is a binding cash offer known as a Rule 2.7 firm offer under the UK Takeover Code. It is an all-cash offer for £12.50 per share and acceptance condition of 50% plus one share.

Comcast will agree to establish an independent Sky News editorial board, maintain investment and will not acquire a controlling interest in any UK newspapers. The next step is to file for EC antitrust approval, which will kick off a 25-day Phase I review.