Charter Communications saw its video subscriber base erode by 320,000 customer accounts, primarily triggered by an eight-day dispute that saw Spectrum TV customers lose access to Disney-owned channels.
The dispute was resolved in mid-September when Charter and Disney struck a unique carriage agreement that allowed Charter to drop some ancillary Disney-owned channels like Freeform, FXM and Nat Geo Wild while also offering access to ad-supported versions of Disney’s streaming services to its customers.
During the dispute, though, Charter pushed its video customers to use other cable-like streaming services such as Fubo to watch channels like ESPN, Disney Channel, FX and some ABC-owned stations, advice that thousands of Charter customers apparently took.
On a conference call with investors and reporters on Friday, Charter’s Chief Financial Officer Jessica Fischer said around one-third of its video losses — or a dip of around 100,000 customer accounts — was directly attributed to the week-long dispute between it and Disney.
Without that dispute, Charter said its cable TV erosion probably would have been around 211,000 customer accounts — a sign that Charter isn’t immune from the trend of “cord-cutting” that has traditional cable and satellite customers switching to broadcast TV and streaming cable alternatives for their live news, sports and entertainment needs.
“Operationally, we handled the Disney dispute very well,” Fischer affirmed during the call on Friday, noting that its customer service call centers were materially impacted by the onslaught of complaints and questions surrounding the Disney dispute until earlier this month.
By the Numbers: Charter Q3 2023 Earnings
- Total Revenue: $13.584 billion (+0.2%)
- Video Revenue: $4.004 billion (-8.6%)
- Broadband Revenue: $5.776 billion (+3.7%)
- Voice Revenue: $379 million (-3%)
- Mobile Revenue: $581 million (+33.8%)
- Residential Customers: 30.012 million (+0.2%)
- Enterprise Customers: 2.224 million (+1.3%)
- Overall Customers: 32.236 million (+0.3%)
- Video Customers: 14.379 million (-8%)
- Broadband Customers: 30.649 million (+1.1%)
- Voice Customers: 8.256 million (-10.4%)
- Mobile Lines: 7.220 million (+54.4%)
(Source: Charter Communications Q3 2023 earnings report; percentages are on a year-over basis)
Charter ended the third financial quarter of the year with just over 13.75 million residential Spectrum TV customers and 628,000 small business and enterprise video customers, for a total of around 14.379 million video subscribers. On a year-over basis, overall video customers dipped 6 percent compared to Q3 2022.
While cord-cutting continues to accelerate, the company isn’t shifting its focus away from its traditional video product. Instead, over the past few months, executives have reformulated some of Spectrum TV’s video packages to offer customers more choices, including a lower-cost plan that eliminates some regional sports programming.
Charter is also partnering with peer cable operator Comcast on a streaming-focused joint venture called Xumo, which is tasked with developing a next-generation video platform that will live within newer-model Xumo set-top boxes offered to customers of both companies and some other video providers.
Earlier this month, Xumo debuted a new streaming box that will be offered first to Spectrum Internet customers, then later to Comcast’s Xfinity subscribers. The box offers streaming access to live video content from Spectrum TV (and near-identical service offered by Comcast called Xfinity Stream and Now TV) along with third-party apps like Netflix, Disney Plus, YouTube and Prime Video.