Below are my key takeaways from the Charter Q2 2016 Earnings Call on Aug 9:
Summary:
CEO Tom Rutledge’s opening statement: “On May 18th we closed our transaction with Time Warner Cable and Bright House Networks creating a new company with a bigger and a significantly more concentrated footprint giving us the local and national scale to innovate and grow faster. Our high capacity network now reaches nearly 49MM homes and business and we have over 25MM residential and business customers in attractive markets.”
Bought Time Warner Cable and Bright House Networks for approximately $67,000MM. The new company will have over 25MM customers in 41 states and be marketed under the Charter Spectrum brand name. They will be the second-largest U.S. broadband provider and third-largest video provider.
Total Q2 revenue for the new company was $9,988MM, a 6.6% YoY increase. Here’s a breakdown by segment:
| Segment | % of Total Rev |
| Video | 41% |
| Internet | 31% |
| Commercial | 13% |
| Voice | 7% |
| Ad Sales | 4% |
| Other | 2% |
| Total | 100% |
About 40% of Time Warner assets and 50% of Bright House assets are not all digital. Will hire 20,000 people to help integrate legacy systems which will take several years.
Expect a $600MM run rate by the 1st anniversary of closing and $800MM by year three. Aggregate debt is now just over $60,000MM at a 4.4x leverage ratio.
Bright House footprint is mainly in Florida which means high seasonality in Q2.
US Footprint: Charter, Time Warner and Bright House
Financial Metrics:
| Pro Forma Rev (In millions) | Q2 2016 | Q2 2015 | % Diff |
| Video | $4,143 | $4,074 | 1.7% |
| Internet | $3,132 | $2,797 | 12.0% |
| Voice | $730 | $706 | 3.4% |
| Commercial | $1,345 | $1,186 | 13.4% |
| Ad Sales | $405 | $390 | 3.8% |
| Other | $233 | $217 | 7.4% |
| Total | $9,988 | $9,370 | 6.6% |
Subscriber Metrics:
| Video (In thousands) | Q2 2016 | Q2 2015 | % Diff |
| Time Warner | 10,769 | 10,774 | 0.0% |
| Charter | 4,325 | 4,282 | 1.0% |
| Bright House | 1,840 | 1,908 | -3.6% |
| Total | 16,934 | 16,964 | -0.2% |
| Internet (In thousands) | Q2 2016 | Q2 2015 | % Diff |
| Time Warner | 13,172 | 12,162 | 8.3% |
| Charter | 5,458 | 4,982 | 9.6% |
| Bright House | 2,037 | 1,903 | 7.0% |
| Total | 20,667 | 19,047 | 8.5% |
| Voice (In thousands) | Q2 2016 | Q2 2015 | % Diff |
| Time Warner | 6,618 | 5,856 | 13.0% |
| Charter | 2,652 | 2,514 | 5.5% |
| Bright House | 985 | 1,029 | -4.3% |
| Total | 10,255 | 9,399 | 9.1% |
List of Key Properties:
Forward Thinking:
- Convert Legacy TWC and Bright House customers into Charter Spectrum customers
Links to Company Website:
- Q2 2016 Earnings Press Release
- Q 2016 Earnings Webcast
- Q2 2016 Earnings Presentation
- Q2 2016 Financial Addendum
- Q2 2016 Trending Schedule
Please comment below if there are data points from Charter you’d like me to include in their next Earnings Call Summary.
