By Lillian Rizzo 

Cable operator Charter Communications Inc. managed to buck the cord-cutting trend during the second quarter, adding thousands of pay-TV customers.

Charter, which operates under the Spectrum brand, said on Friday it added 102,000 pay-TV customers, the first time since December 2017 it didn't suffer losses in the segment. This came as Charter added 842,000 broadband customers. Some of the sign-ups were related to cheaper cable packages and a coronavirus-related relief program that offered free 60-day internet to some new customers.

Charter's stock was 2.8% higher in midday trading.

Traditional pay-TV subscribers in recent years have been migrating to streaming services such as Netflix Inc., Walt Disney Co.-controlled Hulu, and Amazon.com Inc.'s Prime Video. During the second quarter, AT&T Inc.'s DirecTV satellite business lost 886,000 U.S. premium TV subscribers, and another 68,000 online-only channel bundles; Comcast Corp. said it lost 477,000 pay-TV customers and expects to lose roughly the same in the third quarter.

Charter Chief Executive Tom Rutledge on Friday's earnings call said this wasn't a sign of the trends changing, however.

"Nothing has changed to the secular trends, although there was probably a little less downgrading during the period because so many people were stuck in front of screens at home," Mr. Rutledge said. "But I don't think the overall trend changed...We grew faster than the rate of video decline, and it's that simple."

Charter's second-quarter revenue increased 3.1% to $11.7 billion, compared with the year-earlier period. Net profit was $766 million, up from $316 million.

When stay-at-home orders were instituted in March, Charter offered 60 days of free internet service to new customers with students or educators in the household, available through June 30. Companies also agreed not to disconnect customers unable to pay their bills due to coronavirus-related economic challenges, as part of the program instituted by the Federal Communications Commission.

During the first quarter, 119,000 people signed up for the free 60-day offer, and "rolled off as either paying customers or disconnects," in the following months, Chief Financial Officer Chris Winfrey said. In the second quarter, 329,000 people signed up for the free offer, and 160,000 still remained on the offer at the end of June.

Charter said the majority of new customers that signed up for the free 60-day internet took flagship internet speed plans, and nearly 50% added on an additional service, such as pay-TV, mobile or landline phone, for which they were billed.

The company, which started offering mobile in 2018, added 325,000 customers during the second period, 7,000 of which were added alongside the free-internet promotion. There are now 1.7 million Spectrum Mobile customers in total.

New customers even signed up for landlines: Charter added 38,000 landline customers during the second quarter, compared with a loss of 207,000 in the same quarter last year.

The company said it forgave debts of some customers with overdue payments and waived about $85 million from its balance sheet, considered a reduction of revenue in the second quarter. Most of the customers who signed up for the promotion are either still under the free period or now paying their bills in full, Mr. Winfrey said Friday.

"We helped approximately 700,000 customers who indicated economic hardship due to Covid-19," which included residential and small business, since March, Mr. Rutledge said.

Charter had more than 26.3 million broadband customers and nearly 15.7 million pay-TV customers at the end of the second quarter. Charter acquired Time Warner Cable Inc. in 2016, making it one of the largest broadband and pay-TV providers in the U.S.

Write to Lillian Rizzo at Lillian.Rizzo@wsj.com

 

(END) Dow Jones Newswires

July 31, 2020 14:04 ET (18:04 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
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