Charter Communications Poised to Gain from Comcast Deal - Analyst Blog

On Aug 25, 2014, we issued an updated research report on Charter Communications, Inc. (CHTR).

The company reported weak financial results for the second quarter of 2014. Quarterly loss per share of 42 cents compared unfavorably with the Zacks Consensus Estimate of an income of 8 cents per share. Total revenue in the reported quarter came in at $2,259 million, up 7.3% year over year and in line with the Zacks Consensus Estimate.

Unlike most other cable TV operators, the company bettered its video, Internet and telephony subscribers churn rate year over year in the quarter and also witnessed an increase of 1.93% in its average revenue per user.

We believe Charter Communications' April 2014 deal to take over cable TV customers from leading cable multi service operator (MSO), Comcast Corporation (CMCSA), will significantly benefit the company over the long term.. Comcast had to trade off around 3.9 million Time Warner Cable video subscribers to Charter Communications to avoid antitrust restriction in relation to its Feb deal to buy Time Warner Cable Inc. (TWC).

Following the subscriber takeover, Charter Communications will become the second largest pay-TV operator in the U.S. with around 5.7 million subscribers. We believe the deal with Comcast will benefit Charter Communications significantly as the company will achieve necessary scale to counter competition in the intensely competitive U.S. pay-TV market.

On the flip side, the multi-channel video market in the U.S. is almost saturated.  Roughly 87% of the total 114 million TV households in the U.S. are multi-channel TV subscribers. Furthermore, attracting customers from competitors is a difficult task as most pay-TV operators offer innovative packages.

Other Stocks to Consider

Charter Communications currently holds a Zacks Rank #3 (Hold). A better-ranked stock in the industry is Intelsat S.A. (I) with a Zacks Rank #2 (Buy).

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COMCAST CORP A (CMCSA): Free Stock Analysis Report
 
CHARTER COMM-A (CHTR): Free Stock Analysis Report
 
TIME WARNER CAB (TWC): Free Stock Analysis Report
 
INTELSAT SA (I): Free Stock Analysis Report
 
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