Charter Communications navigates the waters of US cable services. The cable system operator has about 6 million mostly-residential subscribers in more than two dozen states, making it one of the top national cable companies, behind Comcast, Time Warner Cable, and Cox Communications. In addition to some 4 million video customers (nearly 90% opting for digital service), Charter also boasts nearly 4 million broadband Internet subscribers and about 2 million computer telephony users. Its Charter Business offering provides Internet access, data networking, phone, and wireless backhaul services to commercial clients. In addition, Charter sells local advertising on such cable networks as MTV, CNN, and ESPN.
The company has some 300 offices across the US. Its key markets include Alabama and Georgia, California, the Carolinas, Michigan, Minnesota and Nebraska, New England, the Northwest, Tennessee and Louisiana, Texas, and Wisconsin.
Sales and Marketing
Charter markets its services via direct sales, outbound telemarketing, its online presence, and Charter stores. The company appeals to new and existing customers with its multi-service bundled packages.
The company reported 2012 sales of $7.5 billion, up about 4% year-over-year, continuing its solid revenue growth over the past decade. Results were driven primarily by an increase in residential Internet customers and growth in its commercial client segment. As is the case throughout the industry, Charter is losing basic video customers.
The company has a history of losses and 2012 was no exception - Charter reported a loss of $304 million, slightly better than the loss of $369 million the prior year. Its sales are not enough to cover operating expenses, debt-related interest (the company has nearly $13 billion in debt), and the investments needed to keep its network up-to-date.
Charter continues to pursue a strategy popular with its competitors, providing voice, Internet access, and other data services as a complete package. Similar to the results of rival cable companies, it has seen rises in telephone, Internet, and enterprise customers, while video subscribers have dwindled among both residential and business clients. It does, however, continue to see upticks in the move to digital video services.
Keeping its network and services current requires substantial investment. The company has upgraded its network to the DOCSIS 3.0 high-speed data capability standard, which is in place for some 95% of homes it has passed and allows Internet speeds up to 100 megabits per second. That deployment will help as it continues to pursue enterprise clients. Charter has also invested in switched digital video (SDV) technology to increase the number of HD channels it offers.
Mergers and Acquisitions
The company acquired broadband cable assets in Alabama and Georgia in 2011 from Windjammer Communications (adding about 17,000 subscribers), and a broadband system serving nearly that number in Missouri from US Cable of Coastal Texas.
In 2013 the company made a bold move to increase its offerings and expand into new markets, purchasing Optimum West from Cablevision for about $1.6 billion. Optimum West serves more than 360,000 customers through cable systems in fast-growing regions of Colorado, Montana, Wyoming, and Utah.
Apollo Funds owns about 24% of the company, while Oaktree Opportunities Investments holds 12%.
Driven by dreams of creating a "wired world," chairman Paul Allen (a co-founder of Microsoft) reportedly poured more than $12 billion into Charter since 1998, and the billionaire saw most of that investment evaporate. After expanding through the purchase of a slew of small-town cable assets that needed extensive infrastructure upgrades, Charter experienced ongoing subscriber losses, financial losses, and a debt load in excess of $20 billion. Faced with legal opposition from some of its lenders, the company's 2009 bankruptcy reorganization plan eliminated about $8 billion of debt, reduced annual interest expenses by about $830 million, and left Allen controlling about one-third of the company (a stake that has since fallen to less than 10%).