Costs were up in Q2, and Charter warns in its report this morning that they will continue to increase “as we drive further digital and HD-DVR penetration”. In the quarter that ended in June, the cable company had a net loss of $83M, an improvement from the $107M loss last year, on revenues of $1.9B, +5.2%. The revenue figure was just where analysts thought it would be. But the loss per share of 84 cents was much higher than the 36 cents loss that the Street expected. The company ended the quarter with 4.1M video customers, a loss of 66,000 over the last 3 months — and more than some analysts anticipated. But, like most cable companies, Charter mostly compensated for that with increases in subscribers for other businesses. The number of high speed Internet customers was up 29,000 to 3.7M, while phone subs were up 6,000 to 1.8M. The big change in the income statement was a 6% increase in costs, to $1.2B. About $25M of the increase was due to rising programming costs. But capex was up 44% to $468M — and could hit $1.7B for the year. The company didn’t say specifically whether it plans to go all digital, but CEO Tom Rutledge says that Charter is “putting into action a number of operational changes” that will “make us more competitive, deliver a powerful customer experience and increase our long term growth potential”.

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