Charter Reports Widened Q1 Loss Amid Rise in Operating Costs

May 2, 2006  •  Post A Comment

Paul Allen’s Charter Communications reported a wider first-quarter loss of $459 million Tuesday, as the cable company’s efforts to attract and retain subscribers caused a spike in expenses.

Though marketing efforts helped Charter add 29,700 basic-cable subscribers in the period, and led to an 8 percent rise in revenue to $1.4 billion, operating costs and expenses surged more than 13 percent to $903 million as the company stepped up the rollout of its telephone product. A year ago, Charter posted a loss of $352 million.

Charter’s financial results come as CEO Neil Smit looks to bolster the company’s position amid a heavy debt load and stiff competition from satellite companies DirecTV Group and EchoStar Communications.

Mr. Smit has made it a priority to improve the customer experience of Charter subscribers and bundle other services, such as high-speed data and telephone service, with the company’s television offerings. At the same time, Mr. Smit has worked to improve the company’s financial health and give it more breathing room by extending maturities in parts of the $19 billion debt load.

Aryeh Bourkoff, a cable analyst at UBS Securities, said Charter’s first-quarter figures “were largely in line with preliminary results.” He noted that revenue growth is showing signs of improvement over the 2005 fourth quarter.

Charter said its digital cable product added 69,800 subscribers in the quarter, compared with 19,900 a year ago, while the basic-cable subscriber additions of 29,700 compared favorably with the 6,700 subscribers lost in the year-earlier period. High-speed Internet subscriptions jumped 126,000 in the period, compared with 94,000 a year earlier. Telephone customers jumped 69,600 in the quarter, versus 9,900 a year earlier.