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Charter Communications Posts Q4 Loss, Revenues Miss Mark

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Charter Communications Inc.CHTR reported weak financial results in the fourth quarter of 2015, with both the bottom and the top line lagging the Zacks Consensus Estimate.

GAAP net loss in the reported quarter came in at $122 million or $1.09 per share compared with a net loss of $48 million or a loss of 44 cents per share in the year-ago quarter. Quarterly loss per share of $1.09 was significantly wider than the Zacks Consensus Estimate of a loss of 12 cents.

Fourth-quarter 2015 total revenue of $2,512 million increased 6.4% year over year, missing the Zacks Consensus Estimate of $2,519 million by a small margin.

Residential segment revenues came in at $2,083 million, up 7.2% from the prior-year quarter. Within the Residential segment, Video revenues totaled $1,167 million, up 2.9% year over year. Internet revenues came in at $781 million, up 16.6% from the prior-year quarter while Voice revenues totaled $135 million, down 2.7% year over year.

On the other hand, Commercial revenues totaled $294 million, up 12.3% year over year. Within the Commercial segment, Small and medium business revenues were $199 million, up 11.5% year over year while Enterprise revenues came in at $95 million, up 14.1% on a year-over-year basis.

Meanwhile, Advertising revenues were $87 million, down 18.9% year over year. Other revenues came in at $48 million, down 1.2%.

Quarterly operating costs were $1,604 million compared with $1,515 million in the year-ago quarter. Fourth-quarter adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $908 million compared with $845 million in the year-earlier quarter. EBITDA margin came in at 36.2% against 35.8% in the fourth quarter of 2014.

During the fourth quarter of 2015, Charter Communications generated $611 million of cash from operations compared with $630 million in the same quarter a year ago. Free cash flow in the reported quarter was $80 million against $89 million a year ago.

At the end of fourth-quarter 2015, Charter Communications had $5 million and $35,723 million of outstanding debt compared with $3 million and $20,887 million, respectively, at the end of 2014. The debt-to-capitalization ratio at the end of the reported quarter was 1.00 compared with 0.99 at the end of 2014.

Subscriber Statistics

Residential segment : As of Dec 31, 2015, Charter Communications had 4.322 million video, 5.227 million high-speed Internet and 2.598 million voice customers. During the reported quarter, the company gained 29,000 video, 115,000 high-speed Internet and 47,000 voice customers.

Average revenue per customer relationship was $111.19 compared with $108.67 in the prior-year quarter. Single Play penetration was 39.1%, Double Play penetration stood at 28.5% and Triple Play penetration was 32.4%.

Commercial Segment : As of Dec 31, 2015, Charter Communications had 108,000 video, 345,000 high-speed Internet and 218,000 voice subscribers. During the reported quarter, the company added 4,000 video customers, 14,000 high-speed Internet and 10,000 voice customers.

Latest Developments

Recently, the Federal Communications Commission (FCC) postponed the estimated cut-off date on the pending review for Charter Communications' proposed takeover of Time Warner Cable Inc. TWC by two weeks.

In May 2015, Charter Communications had reached an agreement to buy Time Warner Cable for $78.7 billion, including debt. Taking into account Time Warner Cable's outstanding diluted shares as of Mar 31, 2015, the value of the stock portion of the deal has been pegged at $55.76 billion.

The deal has been approved by shareholders of both the companies while a go-ahead from the U.S. Department of Justice and the FCC is awaited. Additionally, Charter Communications' investors have sanctioned the impending buyout of Bright House - the sixth largest U.S. cable operator - for $10.4 billion.

Notably, the U.S. pay-TV industry is at present witnessing a series of consolidations. While AT&T, Inc. T purchased satellite TV operator DIRECTV last year, European cable TV operator Altice N.V. has decided to acquire Cablevision Systems Corp. CVC .

Charter Communications currently carries a Zacks Rank #3 (Hold).

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AT&T INC (T): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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