Spectrum customers are starting to hit the cancel button. Charter Communications (CHTR) , the parent company of Spectrum, has just revealed that it has lost 72,000 internet customers and 405,000 cable TV customers during the first quarter of 2024.
“Our internet customer growth remained challenged by a low move and generally low activity environment, coupled with continued elevated competition at least in the short term and a small impact from fewer low-income connects due to discontinued ACP availability,” said Charter CEO Chris Winfrey during a recent earnings call.
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The Affordable Connectivity Program (ACP) was a government program that Spectrum offered, which provided eligible households a discount of up to $30 a month for internet. It was discontinued in February this year.
Losing cable TV customers
In its first-quarter earnings report, released on April 26, Charter reported that it has a total of 29.8 million residential customers, which is a 0.7% decrease from the 30 million it had during the same quarter last year. The company claimed during the earnings call that this was mainly driven by the loss in cable TV customers.
It is no surprise that Charter is experiencing a dip in cable TV subscribers, a phenomenon called “cord-cutting.”
Cable companies have seen many customers canceling their cable TV services in favor of subscribing to streaming services such as HBO, Hulu, Disney+, etc., which offer lower prices compared to cable.
Charter’s residential revenue also took a small hit this year. During the first quarter, it brought in $10.8 billion in residential revenue, down 0.4% from a year ago.
Despite the loss in customers, the company’s internet revenue grew by 1.9% year-over-year in the quarter to $5.8 billion. The company attributed the gain to “promotional rate step-ups and rate adjustments.”
Spectrum quietly hiked its prices for a few of its services in January, according to Cord Cutters News. The company increased the price for its low-income internet program Spectrum Internet Assist by 25%. Its broadcast TV surcharge also rose from $23.20 to $25.75 a month. Its fee for Advanced Wi-Fi increased by $2 to $7 a month. Also, its live streaming service, Spectrum TV Essentials, increased by $5.
These changes come after it hiked its phone and internet prices by $5 a month in July last year.
“We have taken a stand for a new, customer-focused model that provides more value and choice for video entertainment when negotiating all of our programming agreements,” said a Charter spokesman in a statement to Cord Cutter News in January. “Despite these ongoing efforts, programmers continually raise fees for their content, which are passed through as increased fees to viewers and drive higher costs across the entire industry.”
Wall Street boos the results
Investors were unimpressed by Carter’s report. The shares fell 4.5% on April 26 to $254.61. The shares are down 34.4% this year.
Overall, Charter reported earnings of $1.1 billion, or $7.55 a shares, up from a year ago but below the analyst estimate of $7.86.
Revenue of $13.7 billion was flat from a year; the estimate had been $13.75 billion.
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This story was originally published April 27, 2024, 9:00 PM.