Can Charter Repeat the Video Feat?
While that was a surprising accomplishment, not every video metric was as rosy. Premium and video-on-demand (VoD) revenues declined US$12 million in the quarter, for example. Perhaps part of that dip could be blamed on video streaming services like Netflix Inc. (Nasdaq: NFLX), but Charter did acknowledge that it was a poor quarter for events and that it hopes to fix the premium problem with more aggressive packaging this quarter. On the positive side, "free" VoD usage was up, so that's welcome news if Charter can get going with dynamic ad insertion.
Charter will be an interesting company to watch this year now that the bankruptcy reorganization is well behind it.
In some ways, Charter's past troubles have put it in an advantageous spot. As new President and CEO Tom Rutledge put it on Tuesday's earnings call, the MSO "is underpenetrated in the marketplace, both in residential and commercial."
While normally that's not something to be proud of, it's actually good news for Charter's near-term prospects, and is exactly the opposite situation that Rutledge's former employer, Cablevision Systems Corp. (NYSE: CVC), finds itself in now. Cablevision, under Rutledge, became highly penetrated, but that has made it harder for that MSO to grow. Cablevision, like Charter, added video subscribers and was strong in its residential voice and broadband categories in the first quarter, but it did that with super-aggressive pricing on its triple-play bundle that it can't (and won't) sustain. (See Cablevision's Lower Prices Pay Off.)
How Charter will continue to take advantage of its situation is less clear. But there are some hints. On the video side, it's freeing up space to offer 100 HD channels, and expects to have that in all markets by mid-year. And it's getting ready to deploy TiVo Inc. (Nasdaq: TIVO) more aggressively, a tactic that has done wonders for Virgin Media Inc. (Nasdaq: VMED). It's also working on some apps that will turn tablets into fancy remote controls and make it easier for customers to find VoD titles and other content without having to switch out set-top boxes that don't speak a lick of IP.
Even with all that, it will probably take a minor miracle for the MSO to repeat the feat in the second quarter, historically pay-TV's weakest as college students go home and snow birds flock to their summer nests. But if any U.S. MSO is positioned to have a shot, it's Charter.
— Jeff Baumgartner, Site Editor, Light Reading Cable