Charter Sheds 80,000 Pay TV Customers in 2nd Quarter, But Streaming Strategy Slows Losses
Shares of Charter Communications fell over 12% in pre-market trading on Friday as the cable giant missed Wall Street earnings expectations for its second quarter of 2025, continued to bleed pay TV customers and lost 117,000 Internet customers.
Total revenue grew 0.6% to $13.8 billion, boosted by growth of 24.9% in residential mobile and 2.8% growth in residential Internet revenues but offset by lower residential video and advertising sales revenues. Video revenue fell 10% to $3.5 billion, driven by a higher mix of lower priced video packages, $67 million in costs for programmer streaming applications and “more unfavorable bundled allocation” year over year, offset by price increases.
The company shed 80,000 pay TV customers during the quarter for a total of 12.6 million. But the decline marked an improvement from a loss of 408,000 video customers during the same period a year ago, driven by new pricing and packaging launched in September and the early benefits from the inclusion of streaming services in Spectrum’s expanded basic packages.
Spectrum TV Select packages currently offer the ad-supported versions of Disney+, ESPN+, HBO Max, Paramount+, Peacock, AMC+, ViX and Tennis Channel, with ESPN Unlimited, Hulu, Discovery+ and BET+ slated to launch later this year.
Advertising sales revenue fell 6.7% to $371 million, primarily driven by lower core and political revenue. Excluding political revenue, ad sales revenue fell 4.4% driven by a challenged local and national ad market, offset by higher advanced ad revenue and better inventory selling capabilities.
Here are the quarter’s results:
Net income: $1.3 billion, up 5.7% from $1.2 billion a year ago.
Revenue: $13.8 billion, a 0.6% year-over-year increase, compared to $13.76 billion expected by analysts surveyed by Yahoo Finance.
Earnings per share: $9.18 per share, compared to $9.66 per share expected by analysts surveyed by Yahoo Finance.
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The latest quarterly results come as Charter previously revealed plans to merge with the privately-held Cox Communications in a $34.5 billion deal to create a mobile, broadband and video giant.
The combined company, which will change its name to Cox Communications within a year after closing, was expected to have a total of 35.9 million Internet customers, 14.4 million video customers, 10.6 million mobile lines and 7.6 million voice customers as of the first quarter of 2025, per an investor presentation. Charter and Cox expect to generate $500 million in cost savings within three years after the deal’s closing.
In its public interest statement filed with the Federal Communications Commission, the companies said the deal would increase choice and give consumers in Cox’s footprint the ability to lower their monthly bills by choosing Charter plans, improve the combined company’s scale for investment, build a strong competitor to Big Tech and advance quality career opportunities and growth for American workers.
Charter is also set to acquire Liberty Broadband. Under the terms of that deal, which is expected to close at the same time as the Cox deal, Liberty Broadband shareholders will receive 0.236 of a share of Charter common stock for each share of Liberty Broadband common stock held, with cash to be issued in lieu of fractional shares. Charter expects to retire roughly 45.6 million shares currently owned by Liberty Broadband and to issue roughly 34 million shares to holders of Liberty Broadband stock.
Despite the losses in its video segment, Internet revenue grew by 2.8% year-over-year to $6 billion, driven by “promotional rate step-ups, rate adjustments and a favorable change in bundled revenue allocation year-over-year,” offset by a loss of 117,000 customers for a total of 29.9 million.
Mobile service revenue grew 24.9% to $921 million as the company added 500,000 mobile lines during the quarter for a total of 10.9 million, offset by “less favorable bundled revenue allocation” year-over-year. Other revenue grew 18.9% to $839 million, driven by higher mobile devices sales and a one-time benefit.
Looking ahead, Charter expects approximately $11.5 billion in capital expenditures for full year 2025, down from previous guidance of $12 billion, reflecting the timing of “network evolution spend and lower commercial and subsidized rural line extensions spend.” Capital expenditures increased by $21 million to $2.9 billion in the second quarter, driven by “upgrade/rebuild (primarily network evolution) and CPE, partly offset by lower line extension spend.”
Charter stock is up 20% in the past year and 8.8% year to date.
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