Why I'm Shorting Charter And Buying Comcast
Ranjit Thomas, CFA
Ranjit Thomas, CFA
Why I'm Shorting Charter And Buying Comcast
Ranjit Thomas, CFA
Ranjit Thomas, CFA
Will Charter's History With Insolvency Repeat Itself?
Mark Luo • 14 Comments
Mark Luo • 14 Comments
Fri, Jun. 24, 2:48 PM
- New Charter -- the result of Charter Communications' (CHTR -4%) takeover of Time Warner Cable and Bright House Networks -- is headed for a solid Q2 despite integration challenges, UBS expects.
- That's in part due to challenges at telecom competitors, including Frontier Communications, which has struggle to integrate wireline customers it got from Verizon.
- UBS expects Charter's revenue growth to hold at 6.8% and for the company to add 248,000 broadband subscribers, along with a now-standard seasonal decline in video subs (of about 40,000). A year ago, the company lost 74,000 video subs.
- The firm thinks Charter's synergy guidance is overly conservative as well, at 5% of cash opex vs. a more typical 10-15%.
Wed, May 18, 9:15 AM
Tue, May 3, 8:18 PM
- Reps from Frontier Communications (NASDAQ:FTR) will meet with those from Time Warner Cable (NYSE:TWC) in a move that could help break a stalemate tied to distribution of struggling channel SportsNet LA, owned by the Los Angeles Dodgers.
- TWC distributes the channel for the Dodgers, but Southern California fans have been left wanting as only TWC and Charter carry it, while AT&T, Dish Network and Cox have refused it on a cost basis.
- Frontier is meeting with TWC at the request of U.S. Rep. Janice Hahn, who also (unsuccessfully) tried to get AT&T to the cable table. And it may be able to use some positive press after customer complaints surrounded its California switchover of Verizon operations.
- TWC tried a number of enticements before baseball's Opening Day to get wider carriage, especially as legendary Dodgers broadcaster Vin Scully spends his final season in the booth, but admitted defeat when it found no takers.
- Frontier stock fell 4% today despite beating expectations in its Q1. After hours: FTR up 0.6%.
- Now read What The Heck Is Going On With Frontier Communications? »
Thu, Apr. 28, 1:26 PM
- In the Q1 earnings call for Charter Communications (NASDAQ:CHTR), CEO Tom Rutledge said the new company (after acquiring Time Warner Cable and Bright House Networks in deals valued by the government at $78B and $10.4B respectively) will drop the Communications and simply be "Charter."
- With federal approvals coming along, Rutledge now hopes to close within a few days of a May 12 vote at the California Public Utilities Commission, where an administrative law judge has recommended approval of the deal with conditions.
- Full integration will take somewhat longer, though -- likely until the end of 2018. Changing pricing and packaging of the new customers will follow a transition to two-way digital cable across its new footprint, comprising 36M passings.
- Shares in Charter are up 2.8% today despite an earnings miss driven by heavier financing costs tied to the company's deals. TWC is up 1.5% after its Q1 beat.
- Now read Cable Cowboy Ropes Deal »
Thu, Apr. 28, 12:55 PM
- Time Warner Cable (NYSE:TWC), closing in on its acquisition by Charter Communications, is up 1.6% after its own Q1 beat expectations.
- Charter, which is paying about $57B for TWC, is also up today despite a wider loss in its results.
- Revenues grew 7.2% and EPS was up 9.7% and beat consensus at $1.81.
- Revenue by segment: Video, $2.51B (up 1.6%); High-speed data, $1.9B (up 11.9%); voice, $504M (up 6.6%); other, $25M (up 4.2%).
- The company added a net 236,000 customer relationships: 21,000 net adds in video, along with 314,000 high-speed data net adds, and 178,000 voice net adds.
- Free cash flow was down 15% to $346M.
- Press Release
Thu, Apr. 28, 12:27 PM
- Charter Communications (NASDAQ:CHTR), closing in on an acquisition of Time Warner Cable, is up 2.4% despite a Q1 miss driven by some big financing expenses tied to its deal for TWC and for Bright House Networks.
- The company swung to a wider loss of $188M (vs. a year-ago loss of $81M) as interest expenses were up $165M.
- In keeping with peers this quarter, Charter added a net 10,000 video connections, along with a net 141,000 Internet adds and 35,000 voice adds. Single-play connections were up 5% to 2.51M; double-play up 4% to 1.8M and triple-play up 6% to 2.1M.
- Charter's customer footprint expanded about 1% across the board, with video passings rising to 12.85M, Internet passings to 12.59M and voice passings to 12.14M. Residential customer relationships rose 5% to 6.4M; small/medium business up 18% to 405,000.
- Revenue by segment: Video, $1.17B (up 3.7%); Internet, $804M (up 12.1%); Voice, $135M (up 0.5%); SMB, $202M (up 11.3%); Enterprise, $99M (up 13.4%); Ad sales, $72M (up 8.8%); other, $48M (up 2.7%).
- Cash flows from operations were $424M vs. a year-ago $528M, again due to higher cash interest payments. Free cash flow was -$61M vs. the year-ago $101M.
- Conference call link
- Press Release
Mon, Apr. 25, 3:04 PM
- Confirming earlier reports, FCC Chairman Tom Wheeler circulated a draft order recommending approval of Charter's (NASDAQ:CHTR) deals for Time Warner Cable (NYSE:TWC) and Bright House Networks, and the Justice Dept. approved the deals as well (with conditions).
- CHTR is up 3.2%; TWC has gained 3.5%. The Justice Dept. valued Charter's takeover of TWC at $78B; the takeover of Bright House, at $10.4B.
- Wheeler laid out conditions good for seven years to protect online video. If approved, "an additional 2M customer locations will have access to a high-speed connection. At least 1M of those connections will be in competition with another high-speed broadband provider in the market served," partly to "demonstrate the viability of one broadband provider overbuilding another."
- Working with the DOJ, he specified seven-year conditions: New Charter won't be able to charge usage-based prices or impose data caps (it doesn't now). The combined company will be prohibited from charging interconnection fees (such as to online video providers). And it can't set video programming terms that could hurt online video distributors.
- Assuming the FCC commissioners approve Wheeler's draft order, the major remaining hurdle is at the California PUC.
- Now read Time Warner Cable Bucks The Cord-Cutting Trend »
Mon, Apr. 25, 2:25 PM
- Charter Communications (NASDAQ:CHTR) is jumping, +1.9%, as it's set today to receive federal approval of its deals to acquire Time Warner Cable (TWC, $57B) and Bright House Networks ($10.4B), according to various media reports.
- TWC is on the move as well, up 2.3%.
- The Justice Dept. is pursuing approval of a settlement with conditions on Charter to protect the burgeoning online video market, while FCC Chairman Tom Wheeler will reportedly circulate an order approving the deal with conditions to the other commissioners later today.
- The FCC's 180-day "shot clock" to review the deal expired March 25.
- Now read Charter: An Attractive Idiosyncratic Risk In A Market Full Of Uncertainties »
Wed, Mar. 9, 7:25 PM
- Another small hurdle cleared for Charter Communications' (CHTR +2%) buyout of Time Warner Cable (TWC +1%), as New York City has OK'd transferring TWC's franchises to Charter.
- The city's Franchise Concession and Review Committee simply decided Charter has "the technical, managerial and financial ability" to comply with existing terms around five franchises in the area, across four of the city's boroughs.
- The deal's on review at the FCC and (if they're on time) should get a decision there by month's end, while a review at California's Public Utilities Commission is expected to wrap up by May 12.
- Previously: California PUC watchdog: Reject Charter-Time Warner Cable deal (Mar. 04 2016)
- Previously: New Jersey OKs Charter-TWC merger; California still looming (Feb. 24 2016)
- Previously: Charter-TWC: Deal opponents say California PUC is near split (Feb. 22 2016)
Mon, Feb. 22, 8:05 PM
- Progressive groups say they're making headway in trying to take down Charter Communications' (CHTR +1.9%) deal to acquire Time Warner Cable (TWC +1%) and Bright House Networks, with two groups in particular saying they won't be surprised if the California Public Utilities Commission is close to a split.
- "We’re at that point right now where the tipping point could tip one way or another,” Paul Goodman of the Greenlining Institute tells CTFN. "I do feel safe in saying I don’t think this will be a five-to-zero vote, but I’ve been surprised before."
- The review is being conducted by the same administrative law judge who recommended approval (with conditions) of Comcast's deal for TWC last year. Lawyers opposed to the deal note that some of the same opposition groups from the Comcast deal have been granted party status for the Charter deal, and many of the same issues are being re-fought.
Tue, Feb. 16, 4:42 PM
- Time Warner Cable (TWC +0.6%) has extended access to Discovery Communications' (DISCA +2.2%) TV Everywhere content, via its TWC TV app. The move means that Discovery's authentication-only content can be consumed outside the home using TWC's app.
- Discovery launched its TV Everywhere approach last year with Discovery GO, offering live TV and an on-demand library from nine channels: Discovery Channel, TLC, Animal Planet, Investigation Discovery, Science Channel, Velocity, Destination America, American Heroes Channel and Discovery Life.
- TWC's app is supported on a number of viewing and mobile platforms, including iOS/Android. The carrier says its app features up to 300 live TV channels and 16,000 VOD titles in the home, and more than 100 channels/9,000 VOD titles outside the home.
Thu, Feb. 4, 11:02 PM
- Charter Communications (NASDAQ:CHTR) has priced $1.7B in senior notes.
- The company is issuing the unsecured notes, due 2024, at an interest rate of 5.875%/year, and at 100% of principal.
- The offering is expected to close Feb. 19.
- Overall, Charter reported total debt increased to $35.9B as of Dec. 31, and the company held $21.8B of proceeds from debt in escrow for its pending deals with Time Warner Cable and Bright House Networks. Charter's credit facilities provided about $961M of additional liquidity.
- The stock finished down 3.4% today after posting a wider loss for Q4.
Thu, Feb. 4, 2:48 PM
- Charter Communications (NASDAQ:CHTR) is off 3.3% today after a largely in-line Q4 report where sales gained on video subscriber increases, but costs related to the company's planned merger with Time Warner Cable (NYSE:TWC) drove a wider net loss.
- Loss increased to $122M from a year-ago $48M. Residential revenue grew 7.2% in the quarter, while commercial revenue was up 12.3%.
- Adjusted EBITDA was up 7.5%; excluding transition costs for pending transactions, it was up 8.4%.
- It was the first full year in more than a decade where the company added residential and business subscribers. Residential relationships were up 5% to 6.28M; small/medium business relationships grew 17% to 390,000.
- Monthly residential revenue per customer was $111.19 (up 2%). Free cash flow for 2015 was $547M, vs. the prior year's $171M.
Fri, Jan. 15, 6:03 PM
- Charter Communications (CHTR -4.2%) chief Tom Rutledge is coy about the odds -- "unlikely but not impossible" -- that Charter will bid in the upcoming broadcast incentive spectrum auction, pointing to its bid for Time Warner Cable (TWC -2.7%).
- "While we'd like to participate in the auction, it's a very awkward time for us," he tells Reuters. "If somehow we get a faster close, then we might."
- Applications for the March 29 auction will roll in from Jan. 26-Feb. 9; meanwhile, Rutledge thinks the FCC will rule on the merger in March.
- Eyes will be on cablecos like Charter and Comcast who aren't typical spectrum buyers but who have spoken of wireless ambitions. Charter has said it plans more Wi-Fi hotspots and some sort of mobile offering but hasn't detailed a strategy.
- Rutledge said he doesn't know which specific concerns were raised at the FCC by Time Warner and HBO, which have filed in opposition to the Charter-TWC deal.
- Previously: Time Warner opposes Charter-TWC deal on HBO streaming worries (Jan. 15 2016)
Fri, Jan. 15, 12:10 PM
- Time Warner (TWX -1.6%) has joined voices in opposition to Charter's (CHTR -3.6%) proposed buyout of Time Warner Cable (TWC -2.6%), touching one of FCC Chairman Tom Wheeler's hot buttons: It says HBO's push into streaming could be affected.
- The company launched its direct-to-consumer version of HBO, HBO Now, last April -- setting a key anchor point in the cord-cutting debate defining media companies today.
- Time Warner's concerned about statements by Charter management suggesting the combined company "would be inclined to take action directed at programmers in response to the development of 'over the top' services with the purpose and/or effect of slowing down the development of OTT options to the detriment of consumers."
- Dish Network (DISH -3.9%) has filed actively in opposition to the merger and Dish Chairman Charlie Ergen used a meeting with FCC staffers to make the same point: The combination could "degrade" or "destroy" online video competition, which includes its Sling TV service.
- "We think the (Charter-TWC) transaction is more likely than not to be approved," wrote Bernstein's Paul de Sa, "although a rejection is not out of the question, for example, if there is significant documentary evidence of anticompetitive intent toward over-the-top (OTT) video providers as Dish alleges."
Fri, Jan. 8, 1:14 PM
- Charter Communications (CHTR +1.7%) has gotten approval from New York state for its merger with Time Warner Cable (TWC +1.7%), a "significant step forward" for the deal.
- The company had made additional assurances to New York's Public Service Commission, including providing a minimum speed of 60 Mpbs and offering a tier at 300 Mbps throughout the state; building networks out to unserved areas in the footprint; and investing in customer service.
- The transaction is in the middle of a pause in its review at the FCC while the agency reviews a number of supplemental materials it received in December and examines the deals impact on residential customers and on regional sports networks.
- Previously: Charter, TWC trade lower as FCC delays merger review (Jan. 05 2016)
Charter Communications, Inc. provides broadband communications services. Its services includes Spectrum TVâ¢ video entertainment programming, Spectrum Internetâ¢ access, and Spectrum Voiceâ¢. It's advertising sales and production services are sold under the Spectrum Reachâ¢ brand. The... More
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