It’s natural to wonder whether Liberty Media Chairman John Malone’s new acquisition of 27.3% of Charter Communications is merely Step One in a plan to make him a U.S. cable titan — the role he played until 1999 when he sold Tele-Communications Inc to AT&T. And while Liberty CEO Greg Maffei doesn’t predict that, he also didn’t rule it out today in a quarterly earnings call with analysts. He says that cable “could be in for a round of consolidation” at a time when it’s so inexpensive to borrow money and large companies covet opportunities to cut costs — for example by negotiating lower prices from programmers. He cryptically adds that even though Charter can do just fine as a stand-alone entity, “we’ll see” whether it ends up being “a consolidator or condolidatee.” Liberty’s stock purchase agreement gives it the right over time to raise its stake to 40%. Will it do so? “We’ll see what time holds,” Maffei says. READ MORE »
The stock is up 4.3% at mid-day, and poised to close at an all-time high, after the cable company reported a smaller loss than investors expected. Charter had a Q1 net loss of $42M, an improvement from the $94M loss a year ago, on revenues of $1.92B, +4.9%. Analysts predicted the top line would be a little lower, at $1.90B. But the net loss of 42 cents a share handily beat expectations for a 61 cent loss. The number of video subscribers fell 5% year over year to nearly 4M. But video revenues grew 6.8% to $956M due to rate increases and efforts to sell premium tiers and services. The Internet business was stronger with subs up 7% to 3.9M and revenues +10.8% to $501M. “While we still have more work to do, significant progress is evident in our first quarter results,” CEO Tom Rutledge says. He told analysts that due to programming price increases and broadcaster demands for retransmission consent payments cable operators have “very expensive bundles of video packages in our product mix that we as distributors can’t do much about at the moment….So it’s a difficult consumer proposition and the economy is still not great.”
STAMFORD, Conn. & ENGLEWOOD, Colo. (May 1, 2013) –Charter Communications, Inc. (Nasdaq: CHTR) (“Charter”) and Liberty Media Corporation (Nasdaq: LMCA, LMCB) (“Liberty”) announced today that Liberty has completed its previously announced agreement with investment funds managed by, or affiliated with, Apollo Management, Oaktree Capital Management and Crestview Partners to acquire 26.9 million shares and 1.1 million warrants in Charter Communications, Inc. for $2.6 billion, which represents a 27.3% beneficial ownership in Charter using shares outstanding as of December 31, 2012, and a price per share of $95.50.
John Malone’s back in the U.S. cable business. His Liberty Media has agreed to pay $95.50 a share for most of the stakes in Charter currently owned by Apollo Management, Oaktree Capital Management and Crestview Partners. (Crestview will hang on to 7.4% of Charter and Oaktree will keep 2.2%.) The transactions likely will close “in the first half of the second quarter” of this year, the companies say. When that happens Liberty will control four seats on Charter’s board: They’ll be held by Liberty chairman Malone, Liberty CEO Greg Maffei, Liberty Global CTO Nair Balan, and Barnes & Noble CFO Michael Huseby. But Liberty can’t take over Charter just yet. Malone’s company agreed not to up its stake in Charter beyond 35% until January 2016 and after that must stay below 39.99%. Malone was considered the king of cable in the U.S. until 1999 when he sold Tele-Communications Inc — the dominant operator at the time — to AT&T. Charter had about 4M video subscribers at the end of 2012, making it the No. 4 cable operator.
Charter shares jumped 10% yesterday, to $98.04, when word of the deal leaked, and are up an additional 1% this morning. Liberty was up 3.8% yesterday and a little under 1% this morning. “Our initial read is that this is OK for Liberty, Sirius, and other assets in Liberty’s portfolio, although we await additional detail on the ‘new loan arrangements’ used to finance the transaction,” Lazard Capital Markets’ Barton Crockett says.
Here’s today’s announcement:
I suspect investors will be more interested today in hearing about Charter’s plans for the Rocky Mountain cable systems it’s buying from Cablevision. And that may suit management just fine: Charter reports that it had a $40M loss …
On Tuesday I told you that something big was afoot at Charter Communications. Now we know: CEO Tom Rutledge has agreed to buy a collection of Cablevision’s cable systems in the Rocky Mountain states that he used to manage when he was COO of the Long Island-based company. He left at the end of 2011. Cablevision paid $1.4B for the systems, formerly known as Bresnan Communications, in 2010. But it said in November that it was considering selling the operation. The systems in Colorado, Montana, Wyoming and Utah have 304,000 video subscribers. Rutledge calls them “some of the fastest growing cable assets in the United States.” Cablevision shares were up 5.6% today as word of a possible deal began to spread. Charter was down just 0.5%.
Here’s the release:
Stamford, Connecticut – February 7, 2013 – Charter Communications, Inc. (NASDAQ: CHTR) (“Charter”) and Cablevision Systems Corporation (NYSE: CVC) announced today that they have entered into a definitive agreement under which Charter Communications Operating, LLC will acquire Cablevision’s Bresnan Broadband Holdings, LLC (“Optimum West”) for $1.625 billion in cash. Optimum West manages cable operating systems in Colorado, Montana, Wyoming and Utah that pass more than 660,000 homes and serve 304,000 video subscribers and 366,000 customer relationships.
NEW YORK – January 29, 2013 – Charter Communications (NASDAQ: CHTR) and CBS Corporation (NYSE: CBS.A and CBS) today announced the renewal of their content carriage agreements covering retransmission consent for CBS Owned Stations as well as continued carriage of Showtime Networks, CBS Sports Network and Smithsonian Channel on Charter’s cable television platform.
The agreement also includes new online and on-demand availability of programming from CBS and SHOWTIME. Plans are underway to make primetime shows from CBS available on-demand to customers across all Charter markets in the coming months. The launch of the authentication service SHOWTIME ANYTIME®, providing Charter’s SHOWTIME subscribers with unlimited access to acclaimed original series, hit movies, sports, documentaries, specials and much more via computers, iPad®, iPhone® and Android™ devices, will be coming soon as well.
Charter’s Tom Rutledge didn’t make the point as forcefully as Time Warner Cable CEO Glenn Britt did this morning. But asked whether he might follow his colleague who vowed to cut underperforming cable channels Rutledge told the UBS …
TiVo CEO Tom Rogers has to be breathing a little easier this morning. He’s been struggling to show that the DVR pioneer isn’t just running on fumes — and settlement payments from patent-infringement suits like the big one this week with Verizon – as it struggles to compete with less expensive cable- and satellite-provided DVRs. One key to his strategy has been to persuade small- to mid-sized cable systems to use TiVo software and equipment to help them compete with technology from rivals including DirecTV and Dish Network. That initiative looked wobbly after Charter — one of TiVo’s most high-profile customers — said it’s revamping its technology plans. But TiVo won a vote of confidence this morning from Mediacom, the No. 8 cable operator with about 1M subs mostly in the Midwest.
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 …
Charter’s share price spiked nearly 3% before diving to -1.2% in morning trading as investors absorbed the cable company’s mixed Q1 report on a morning of overall anxiety in global markets. Charter reported a net loss of $94M, an improvement from the $110M loss in the same period last year, on revenues of $1.83B, up 3.2%. Analysts expected revenues to be slightly higher, at $1.84B. But the loss, at 95 cents a share, was worse than the 59 cent loss that company watchers forecast. The company says that its programming costs are up $25M vs last year even though it has lost video customers since early 2011. “It’s become a big number,” as well as “a difficult part of the business to manage,” CEO Tom Rutledge told analysts. Video revenues came in at $895M, -2.4%. That was offset by gains in sales of broadband, phone, and commercial services. But even though Charter had fewer video customers than it had a year ago, the number was up by 20,000 to 4.2M in the first three months of 2012. The increase stood out in a period when other operators including Comcast and Time Warner Cable lost video customers. Charter says it expects to build on the momentum by adding HD channels — it should have 100 by mid-year. Rutledge adds that he’s optimistic because “the economy isn’t getting worse” as Verizon and AT&T hit the brakes on their spending to build their rival video services. The company raised rates about 3% in March.
It’s hard to begrudge TiVo CEO Tom Rogers for sounding cocky on a day when his company’s stock shot up 10.1%. That was the result of last night’s announcement that AT&T agreed to pay $215M to resolve the DVR pioneer’s patent infringement law suit. The victory, following a similar one last year with Dish Network, means “we won’t hesitate to be as aggressive as we need to be” with other challenges including one against Verizon, Rogers told bankers and analysts at Citigroup’s Global Entertainment, Media and Telecommunications Conference. The news helped to support his larger theme that TiVo has finally turned the corner after years of declining subscriptions and financial losses. “We are getting much, much closer to our goal of EBITDA (cash flow) profitability,” Rogers says. TiVo subscriptions will rise as the company establishes itself as an ally for cable and satellite providers who feel threatened by Google and Apple’s efforts to break into the TV business. Earlier Wednesday Charter CEO Mike Lovett told the Citigroup audience that his company’s plan to offer TiVo DVRs is “a game changer” and “a way to take it to the
That was quick. Just days after Tom Rutledge shocked the cable industry by leaving Cablevision, he has emerged as CEO of Charter. The No. 4 cable operator is still struggling to regain its momentum since 2009 when it emerged from bankruptcy protection. That’s been tough because many of Charter’s systems are in rural areas where satellite companies are popular. But Charter’s focused effort to build its broadband business, and make needed upgrades to its systems, has enabled it to outperform many of its cable industry peers. Charter shares are up 3.4% in after hours trading, recovering from the 3.3% drop during the day. Here’s the company’s release:
ST. LOUIS, Dec. 19, 2011 — Charter Communications, Inc. (NASDAQ: CHTR) (“Charter” or the “Company”) today announced that its Board of Directors has concluded its previously announced CEO search process and appointed Thomas M. Rutledge as President and Chief Executive Officer. Mr. Rutledge joins Charter immediately and will become the President and Chief Executive Officer effective February 13, 2012. Mr. Rutledge will also become a member of the Charter Board of Directors at that time.