by HN Porter of tech4today.net
Last year Charter Communications or Spectrum experienced a steady decline in cable TV customers and this saw the company losing 54 000 cable TV subscribers in the third quarter. Seeing that the company has 16.6 million cable TV customers, the number of customers lost may seem like a drop in the ocean, however, it is a worrisome drift.
Cord cutting has had a significant increase in the third quarter of the cable industry with almost 1 million customers leaving the industry. This is the highest number in history where customers abandoned traditional pay television in a single quarter ever. Although most of the declines came from satellite providers, Charter still saw a fall in its stock. According to data provided by S&P Global Market Intelligence, Charter Communications shares fell from $329.20 to $284.97 in December, which was a 13% drop.
As compared to its rivals, Charter Spectrum makes most of its money selling cable and internet services. The company is not a major owner of content and it does not have a backup business that covers it from the effects of increased cord cutting.
It hasn't all been a hard hit for Charter Communications though. The company experienced an increase in broadband customers and this kept Charter's revenue growing even as it loses cable TV customers. The company had an additional 308 000 internet customers in the third quarter which covers the loss in the cable. The fear at the moment is that broadband is reaching its peak while cable losses keep increasing. Unfortunately, there is nothing much Charter can do about the issue to protect itself and it will most likely take a toll on the business.
It could take some time for Charter to see significant declines that are not offset by broadband customers, however, the cable company has to find a way to either branch out in business or convince customers not to cut the cord. This could be a great challenge given that the many options cheaper than cable TV.
Source: FOOL
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