Charter Communications Loses 100K Subscribers Due to Disney Dispute
Charter Communications (CHTR) experienced a nearly 10% drop in shares after reporting earnings on Friday. The company revealed that it lost approximately 100,000 subscribers as a result of its cable dispute with Disney (DIS) earlier this fall.
Charter CFO Jessica Fischer mentioned on the company’s earnings call, “The impact on customer relationships was lower than expected, partially due to the availability of alternative over-the-top options.”
In the third quarter of 2023, residential video customers decreased by 320,000, reflecting a 6% decline compared to the loss of 211,000 customers during the same period last year. This decline was attributed in part to video disconnections caused by the temporary loss of Disney programming in early September.
During contract negotiations, Charter and Disney reached an impasse over whether Disney should offer Charter subscribers free access to its ad-supported streaming services as part of the cable packages. The blackout had significant consequences, affecting prominent sporting events such as the US Open, and prompting both companies to finalize a deal.
They announced on September 11 that they had resolved the dispute and would terminate the media blackout. As part of the agreement, Charter will include certain Disney streaming services – the ad-supported version of Disney+, ESPN+, and ESPN’s upcoming direct-to-consumer offering – in select cable packages without any additional charges.
However, the Disney dispute was not the only challenge faced by Charter in the last quarter.
Charter failed to meet expectations for quarterly broadband additions due to increased competition. The company also revised its annual expenses forecast, projecting total capital expenditures, excluding line extensions, to reach approximately $7.2 billion for 2023. This marks an increase from the previously anticipated range of $6.5 billion to $6.8 billion.
The company’s free cash flow was also underwhelming, with Q3 reporting a decrease from $1.5 billion to $1.1 billion compared to the prior-year period. This decline was primarily caused by higher capital expenditures, driven by Charter’s efforts in network evolution and expansion.
