Charter pushes back TiVo launch
In this morning's fourth-quarter earnings conference call, Charter Communications executives said the company was pulling back on the reins for its planned deployment of TiVo's Premiere box.
Charter has a trial underway in Fort Worth, Texas, with TiVo, and a couple more are in the works with employees in other markets, but company executives said this morning that its VOD systems were different than ones that TiVo had previously worked with.
"We don't expect that testing will be completed in time for us to fully launch TiVo across the enterprise by the end of the second quarter as previously projected," said Charter's Don Detampel, executive vice president of technology and president of commercial services.
In December, Charter announced that it was launching TiVo Premiere in Texas, with a wider rollout set for the first half of this year. RCN has TiVo Premiere deployed in several of its markets, including Chicago, and last year, Grande Communications announced it was going with TiVo Premiere as its DVR of choice.
Despite the delay, Charter CEO and President Tom Rutledge, who has two weeks under his belt at Charter after leaving Cablevision late last year, said this morning that he always thought "TiVo was a fabulous interface, and I'm glad to see Charter and TiVo working together."
The deployment of TiVo Premiere was one of four strategic initiatives for this year that was detailed by Detampel. He said Charter wanted to change the dynamic of its video business this year, which also included having up to 100 HD channels in most markets, more on-demand content, more streaming content and driving penetration of HD DVRs.
The other three strategic areas of focus for this year included Charter's ongoing customer experience transformation, having the fastest and most reliable data services in its footprint, and continuing its commercial services growth.
On the customer service front, Charter is working on its "none or one" philosophy, which boils down to customers not experiencing any service disruptions, but if they do, having it take just one time to fix them. The philosophy is backed by Charter's service guarantee.
"We still have a lot of work to do, but the cultural transformation is taking hold, and early customer feedback is positive," Detampel said. "Satisfaction for our new customers is 35 percent higher than for tenured customers."
On the data front, Charter increased its speeds for the third time in three years in December, and 95 percent of its customer base has speeds of 15 Mbps or higher.
Charter's commercial services revenues increased by almost 22 percent in the fourth quarter, and it plans on devoting more capex to commercial services this year.
"We'll continue to invest capital to upgrade our regional core networks and extend our fiber plant to support cell tower backhaul opportunities passing additional business opportunities," Detampel said. "As of the end of 2011, we had 1,400 cell towers in service and over 300 towers under contract. We see lots of opportunities for growth in this area."
Charter CFO Chris Winfrey said the capex investments, particularly in cell backhaul, "significantly strengthen our IP capabilities at the core and at the edge of the network, which supports our residential and commercial services, including video, over time."
Charter largely completed its DOCSIS 3.0 and switched digital investments last year, but the company wants to migrate to all-digital in order to offer more HD channels and drive penetration of its services across the 12 million homes passed in the company's footprint.
In order to support higher residential and commercial growth, Winfrey said that capex this year would fall somewhere between $1.4 billion to $1.5 billion, which is similar to last year. The spending will be in the following areas: customer premises equipment, which will be driven by customer volume and higher HD DVR penetration; cable modem termination systems (CMTSs), to support speed increases, higher penetration and increased usage; service group splits to gain more HD capacity on switched digital video in order to hit 100 HD channels over the course of the year; and further investments in the customer experience transformation, both in the systems and in the network.
Winfrey didn't say what Charter's all-digital strategy was, but since it has deployed SDV, it seems likely that the next phase will include digital terminal adapters (DTAs).
"As we enter 2012, we're continuing to accelerate our volume growth year-over-year," Rutledge said. "We'll stay on the offensive as we move to increase penetration and drive deeply in the marketplace. Pricing, packaging and technological innovation are the key focus areas for me personally as I get up to speed. This is a great company with even greater potential. There's a lot of work ahead of us, but we're focused on execution. We're in a terrific position, and I'm pleased with the start of the year."
Like Comcast, Charter did stem the tide a bit when it came to its loss of basic video subscribers in the fourth quarter. For the quarter, Charter lost 45,500 video customers, which was 25 percent less than it lost in the same quarter a year ago. Charter's video revenues were down 2.3 percent, with premium services down $6 million.
Charter more than doubled up on its data subscribers by going from 32,700 subscribers a year ago to 67,000 in the most recent fourth quarter. Overall, high-speed data revenue was up 9.1 percent due to the additional subscribers and home networking revenue. Winfrey said 25 percent of Charter's data subscribers were using its Wi-Fi-enabled home networking service.
Charter added 27,000 new phone subscribers in the fourth quarter, which led to a 2.8 percent increase in revenues.
In the fourth quarter, Charter's revenue increased 2.8 percent to $1.83 billion. The nation's fourth-largest cable operator reported a loss of $67 million, or 63 cents per share, from a year-earlier loss of $85 million, or 75 cents per share.
For the year, the company's net loss was $369 million, bigger than the $237 million it lost in 2010. Charter reported revenue of $7.2 billion for 2011, up 2.1 percent from $7.1 billion in 2010.