Charter Will Introduce New Price And Packages To Prevent Subscriber Loss

Thousands of Time Warner Cable customers have canceled their TV services due to the increased pricing changes in the past couple of months. Charter Communications bought TWC last year and things have not been easy for Charter since the acquisition.

Reports indicate that Charter has lost approximately 47,000 video customers since the merger and the major portion of these subscribers were Time Warner Cable users. However, Charter was able to gain some customers in their pre-merger territory, and in the Bright House Networks territory, which was acquired by Charter along with TWC last year.

In a recent earnings call, Christopher Winfrey, Charter CFO said, “Quarterly video customer performance improved year-over-year at pre-deal Charter and at Bright House, while TWC video net loss was 54,000 worse than last year, primarily driven by an increase in video downgrade activity, given legacy pricing and packaging issues. So in total, we lost 47,000 residential video customers in the quarter, primarily driven by the losses at TWC.”

This is undoubtedly one of the worst performances for Time Warner Cable, and it is far poorer than the third quarter of year 2015, where the major company stated that, “residential video net declines of 7,000—[the] best third quarter since 2006.” However, analysts indicate that this performance is much better the third quarter of year 2014, when TWC lost approximately 184,000 video subscribers in the timeframe.

About 10.8 million video subscribers were under TWC before they merged with Charter Communications. Charter CEO Thomas Rutledge said that the video customer base of TWC was “mispriced” and it needs to progress “in the right direction.” Rutledge also added that Charter would release the new packages and prices to the existing TWC subscribers and all others by spring 2017.

The recent report from the Federal Communications Commission data indicates that the cable prices have been significantly rising for the past 20 years. The cost of programming is one of the major reasons for this significant in the cable prices.

“The question, then, is how fast does that [new pricing] flow through the business in a corrective way. But if you look at what we did at Charter, a substantial amount of the customer base turns over every year into new pricing and packaging through both churn activity and through upgrade activity,” Rutledge said.