CHTR - Earnings call transcript Q4 2018 | Charter Communications, Inc.

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Operator

Good morning. My name is Michelle, and I will be your conference operator today. At this time, I would like to welcome everyone to the Charter’s Fourth Quarter 2018 Investor Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. now turn would to call I Anninger. Stefan Instructions] like the to over [Operator ahead. go Please

Stefan Anninger

our and morning, call. this found Financial that investor Charter’s The accompanies under on Information be section. can Good call to presentation welcome fourth ir.charter.com the website quarter XXXX

of I in number our XX-K including most factors we SEC are proceed, you filed there cautionary recent like filings would Before and this remind other to that a risk contained morning. statements our

cautionary review statements not We those and other this risk on will factors call.

forward-looking no we you management’s to Charter to the results read only predictions, However, we and may forward-looking to view are obligation make statements carefully. make prospects that expectations, uncertainties in statements statements. cause reflect such from to additional and them results. actual concerning subject differ statements undertakes current that encourage future. and Various to These forward-looking or historical revise on update remarks this plans or risks constitute statements or forward-looking Any anticipated call

the by referring be defined growth to Please we our calculated defined call other titles note non-GAAP that year-over-year also basis all a on will measures similar in the to with specified. measures rates used by this on not are course comparable be Charter earnings as noted as companies. and reconciled in may and presentation call, unless measures of otherwise During These materials. non-GAAP today’s

over Chairman Tom. Tom I’ll call Rutledge, today’s and that, turn on me Joining With to CEO; our call Chris are and Winfrey, the CFO.

Tom Rutledge

phase XXXX, customer of while integration. We simultaneously in completing impacting Thanks, Stefan. most performed our well the

our by X.X% X.X%. is going or We grew to growth customer and adjusted in we and grew integration complete, full cable relationship accelerate goal by base the year, total customers, by flow our X.X%. our nearly EBITDA Internet cash XXXX forward. cable now revenue With million For X.X customer

new together we faster. and Following create in giving we the benefit ways XXXX, our innovate larger to and process in pursuing expected. scale more companies concentrated beginning large in strategy the footprint, three put a we we that order started additional When grow company XXXX, transactions We're with of to us very to of from the all in a scale to against acquisitions to a two-and-a-half of launches XXXX over doing single DOCSIS any showed X.X we in unified X-gig fully Slide service Spectrum presentation spent benefit a that We the Mobile. entity that. we and marketing, plan knew with from need earlier-than-expected technology integration first today's the create four would progress operating service the product, reflects of infrastructure. and and years May

do, work our integration our essentially customers and That operating strategy integration to now of we complete. our We've now to residential all still process is been Spectrum packaging. While customers, behind long-term acquired But customer-facing to of to interactions our ability some the excellent but network virtually migrated as have counter to are have of our initiatives and our XX% pricing to us. related disruptive and though they've service execute planned. long-term benefits, reducing upgrades

the is footprint. We've our upgrade offering the entire initiative and finished. now our of DOCSIS business all-digital and X.X Our across completed residential speed launch to gigabit

consistent. specialized infrastructure and national, service Our is

significantly free EBITDA integration With driving most our capital noncustomer facing this us, customer growth. by of pieces last also nearly year-end biggest Our in lower XXXX, are By in cash year's to the position activity intensity long-term nature. growth I said centers platforms completed fully very and the in-sourcing of integration operation care sustainable a end accelerating we're But integration. growth, our have behind across be initiatives and to service now we is drive call virtualized and our expect will of company customer flow and complete. as relationship field the

Spectrum required force in personnel and that through our to sales XXXX, higher every forward opportunity. Mobile some our number voice triple to sales the process Those continue sales way sales we changes look volumes. October We September of including we to packaging including through priorities made and take retrain changes hold sales we landline XXXX we key driving on in That will channels. including remain key As effectiveness and double to focused strategic our a sell took all play -- improve. in

Mobile of We're is demonstrate the fourth existing over our mobile Our meaningful We mobile continues churn added customers. service. as and planned. taking that results sales cable fourth show quarter upselling new we're a XXX,XXX also mobile growing lines ramping quarter to percentage cable improvements in to up. Spectrum seeing service

to longer the cable service a providers mobile from began the sales our and as Mobile awareness drive offering more from retention stores. service our expect become incremental we the for process brand build other Over our to Mobile at existing some term, tool. and their we handsets Spectrum consumer In to of allowing Spectrum product we transfer savings customers December, powerful of

Own Over well-positioned Your availability a having we service the our Bring broader to XXXX market expand to Own allow In -- expand to do also opportunity own -- reduce Device their are transactions. us themselves store. of and Device Bring include visit bring program to will devices device Full set we'll Your customers a Your Bring process coming substantially. without process in to to mobile Own months the Device their own

services the as pricing vast network meaningful to and activity, larger installs. should calls enhanced from behind we to we product also our self-service service across decline of see levels rolls. reduction of begin Service self And benefit our expect a With online improves. majority truck in activity as greater us, a swamps, and CPE and base integration better

level of will extend activity and XXXX, satisfaction, customer lifetimes. the in lower churn So reduce raise customer

significant Finally the reduction in we’ll a in intensity. XXXX capital see is year

the grow as of Our goal a and was over long-term as this our as entity beginning assets put faster in possible. operate position to process single combined at the quickly to a to

turn our higher up and us now behind short-term. intensity own stepped network our and beyond Chris and install of cable becomes returns in Winfrey. we the to on revenue, the continue driven, we call the is will products demonstrate appropriately also spending home expected plant result, while as over our expect network. planned, Already of capital consumer-focused invest their of XXXX per assets, in significantly our flow a benefits business larger I cash in IT As will based I'll our of XXXX cable and XXXX, capital fall business our our higher That reliability of in operating a investment the and our the in spending spend further declines, the networks long-term as services, assets. our all cloud recent superiority set the increasingly but on to and increasingly consumers of improves CPE strategy and performance

Chris Winfrey

year-over-year EBITDA Thanks, recognition of the couple our standard a of there lowered and but last we before quarter's fourth quarter EBITDA new and storms and the Michael rebuild $X In adoption year-over-year to the in less cost basis the they Tom. highlight small. the the as administrative to a to by year's had was quarter, covering to CapEx it negative items our were expect California, impact in on we we year. A prospective in wildfires and relates since minimal. compared be have recovery about million relatively revenue And did of last should Like fourth the amount. this quarter, results. quarter, in XXXX, continue Hurricane some last as don't Florence in And impact

XXX,XXX XXX,XXX with quarter packaging benefits. residential to by grew Spectrum Now which fourth what spending and quarter. packaging churn are in we’ll XX,XXX. of relationships by our meaningful Video end quarter. year customer over and the saw slowing, the transactions residential Total declined Including means at the Internet in acquired upgrades months. customers pricing we Legacy last in Over similar grew results. and turning the Charter, the completion declined XXX,XXX and the migration to XX,XXX residential network pricing that see in of lower our XXXX and voice CPE were at fourth SMB together and And by last XX of and by XX% SMB,

added of versus quarter Internet, in fourth year. residential XXX,XXX XXX.XXX total For of last a we customers the

months, X.X%. of million footprint Gigabit we've X.X XXX% the our grown total our by Internet or nearly base XX we to X.X. service DOCSIS offer customer Over using now customers And last residential

product Android, Kindle last of which experience. our are is the Fire, packages available and customers video is platforms, targeted and residential of better overall primarily new Smart being our vast year, by Over declined Internet-only TV And continued a including Roku, app Choice our Spectrum Stream video X.X%. to the deployed variety has Xbox, via the majority on Samsung TV of computers. providing video Spectrum connects, at a Sales Guide video to well. do

we Internet. a of in on Apple app customers launched We voice Zero XX,XXX lost Spectrum feature customers a residential mix. Spectrum selling gain last with also TV by voice, for versus quarter for Sign-On recently driven lower our triple-play TV year, a In XX,XXX the

went with voice when mobile. off mentioned, large voice of are triple wireline to did $X.XX decade. Tom service the At the now changed in well the value-added but to acquisition, roll-off to sell-in, bundled As mid-September is fourth to selling a connectivity for in With pricing change now voice mobile as we wireline the play price over promotion. and launch rolls sales, going driver to a cable value These address that be no the voice our transition what forward, positioned machine, retention changes wireline at for similar is a voice quarter. $X.XX a customer last meaningful

We and with Gig the mobile. Unlimited in lines of lines. to By healthy added quarter the Turning mix XXX,XXX both mobile a

lines. As of XXX,XXX December we had

our as As functionality Bring we we population Tom including add capabilities, Own expanded new mentioned. Device features Your and marketable

per customers. the migration in grow or in with year EBITDA last revenue. revenue shows And given video we in partially of of in and past customer X.X%. by reflect residential cable and growth offset promotional does and the no growth to seven combined by revenue benefits customers any the now. mix higher taxes we grew were rate in and growth customer total ARPU Residential lower adjustments. Those Slide grew expense did that relationship not Keep rate our SVP resulted X%. residential revenue both year-over-year year-over-year campaign ARPU our with mind X.X% XXX,XXX of voice roll-off subs Internet-only mobile impact Over or by cable our ARPU

We've XX% combined re-pricing X.X%. last revenue SMB quarter. Legacy X.X% Total expect in grew our up lower of Enterprise commercial. repricing. grew grown last we level and than Bright was relationships by enterprise SMB revenue the slowed. to have XXXX, over revenue and by growth for year. in SMB SMB SMB ARPU decline Into faster as revenue the fourth the a by TWC House customer quarter in by X.X% the products Turning impacted

enterprise quarter, this backhaul and XX% by Navisite grew fees, which cell were benefit Excluding one-time year-over-year. growth X% some with a PSU

enterprise the SMB in to group residential stage to of in a as very enterprise. utilizes being its in opportunity with it the confident near-term. is traditional will earlier impact strategy of our revenue advertising similar device of totaled beginning that about to pricing what in last remain in Mobile and growth have customers by also But businesses an the the growth the revenue. million grew over pricing, unit to larger Our happen $XX ARPU in as due it’s of follow but and $XX transition revenue enterprise all years. moving SMB. year-over-year growth advertising growth We accounted two revenue very competitive Fourth pressures The process and political for revenue quarter million more ultimately in done XX% inventory. our that long-term we

X.X% working advertising. As was the recognized with X.X% consolidated growth on In phase, revenue we cable during date. quarter installment highlighted. or usage total, up are plans which Hence, excluding connect year-over-year under X.X% growth EIP of or the payments device future installment a equipment mobile revenue as revenue reminder, the fourth all when

year-over-year. So, operating operating the eight. expenses fourth on quarter moving $XXX In expenses million slide or grew by total to X.X%

quarter declined grew by revenue year-over-year. finally, standard Excluding customer mobile, given Lakers voice baseline X.X% of growth. growth programming flat quarter were XXXX and of and costs year-over-year in new video of and compared by recognition for relationship expenses our connectivity good year-over-year is some costs customers bad on fourth operating And as which by this line increased games I fourth rate gross quarter was re-classed January XX.X% the mid-single-digit XXXX. XXXX the tax the year-over-year, of expenses the produced growth. driven earlier. versus probably mentioned up that improvement XXXX, X.X% even cost service adoption more X.X% by the well Cost to service to some a and excluding And fee customers debt content Regulatory a to in X.X%. as increased X, content Programming

totaled and driven sales of costs costs investments. and our from and We ad Angeles. X.X%. $XXX business costs are $XXX of costs declined stand million year-over-year in and were year-over-year, by total see of the the by expenses the fourth JV Adjusted quarter. our in was mentioned, up X% our related through the business, including X per-relationship And cost integration, I market EBITDA political continue of cost device practices to in and higher IT comprised portion up and insurance other the adjusted operate Comcast. by mobile changes lowering overhead cost for tax News tied and own by grew X.X% device essentially in-sourcing to launch launch to Spectrum grew EBITDA expenses including in loss X.X% operating cable marketing when property the productivity our with ongoing expenses personnel channel and from expenses million, Mobile revenue to Cable EBITDA benefits service Los cable and

to immaterial high acceleration growing annualizing as for place starting estimating fourth quarter own our mobile That as line drives we a assumes EBITDA loss XXXX, EBITDA costs. is well mobile in As XXXX loss. growth good generalization our our start-up mobile XXXX which acquisition costs look

a revenue cable. continue relative cash the to benefits business without to costs, the cost positive and planned mobile scale and be EBITDA basis mobile we accounting will lines variable flow and fixed expect for As operating to acquisition stand-alone on

slide amortization the GAAP income to in by reform, year's generated year-over-year on last X, year's given billion interest lower decline in primarily Turning other to $XXX and driven year. net higher attributable Charter's fourth income offset quarter. the quarter and EBITDA and depreciation higher was this we tax partly million That fourth versus adjusted shareholders tax expense. pension and $X.X by of was non-cash benefit expense federal last net derivative The adjustments

Turning to driven CPE was migration decline less Capital The lower quarter; $X.X slide and totaled finished as expenditures XX fourth than we the in on year. with lower million billion about $XXX CapEx. a all-digital. last SPP primarily by

extensions out consistent to lower higher more also offset versus on we well some the continue timing conditions. We retail and scalable of as merger our spend fulfill and on capital. million support spend, footprint for and related year in-year completion projects. to infrastructure this is spend capital last, CapEx had as support quarter, We given various of our integration software, by of Most That driven of this spent the with by which $XXX is partly spend reflected line mobile-related JV Comcast as was in mobile our on build mobile. upgrading

works. think the Following CapEx simple mobile what I also is QX mentioned run to way using rate a about XXXX earlier,

We expect mobile CapEx footprint. the following will of our decline upgrade retail

or consistent previous XX.X% expectations. year $X.X in full our cable CapEx XX.X% revenue, down from the XXXX, For XXXX, we in of with billion spent cable

we both of and $X down capital cable capital but decline mentioned, our Tom software including Within CapEx generally from will don't dollar in internal XXXX, the I there's absolute terms calls billion development in real in total to some intensity. said. roughly for spend, which CapEx and guidance, cable meaningfully and provide We capital product XXXX, billion billion, significant treat terms and single XXXX reasons of tell with $X CapEx. improvements $X.X network XXXX look still we've will integration you a for estate that we plan As in be number, all development in down as

do the including cash so. faster As projects would in of XX $XXX million ROI Slide on drive will $XXX the usual, our spend investment growth projects quarter, to year we we we this accelerated new high continue without consolidated generated shows in flow of free existing during if find million course about team.

$X.X approximately flow, Excluding fourth generated same mobile, last we cable cash as year's roughly of free quarter. billion the

fourth entirely those of cash we offset quarter CapEx Recall amount higher working a were have and year-over-year. quarter year-over-year that capital lower of significant flow adjusted in almost capital within benefit spent linked this While we EBITDA XXXX. cable and the lower from by a did

very XXXX. fourth had large we capital within So a benefit $XXX the of quarter nearly million working

over impacts, working the the in flow year-over-year Excluding million free by fourth cash $XXX year-over-year capital quarter. cable was up

For look mobile in related step the our first working CapEx quarter year flow billion another expect for the the add question XXXX and means both finished full XXXX, And we'll to first continue principal. in which customers, balance, term continue year drivers of impacts capital of in see outsized meaningfully working which as first capital The to as which will our quarter drivers $XX capital in longer XXXX, cable both capital the timing to over cash make quarter already full headset-related and while year quarter payables and down it's of these immediate separate that. impacts. I are CapEx an working the to debt working year reduction quarterly cable a falls we XXXX. have drive similar cable material of with logical. needs will could full We

run That interest $X.X at quarter due Our annual adjusted analyze was year-end to in purchase the $X.X primarily our interest accounting. is cash billion rate is expense versus difference rate. run billion P&L

stands XX and of leverage mobile At to held hand we we at times include bank which more $X.X our of nearly end revolver, as the capacity. and leverage, billion declining. X.X bonds end looking issued in debt slide size adjusted third X.XX at/or to in of to from X.X we of target X will debt last maturities billion times. months of investment-grade times our quarter, our increased all declines of our the liquidity general of and end stay in cable-only in January, our XX $X.X used repayment shown the when intend in purposes, EBITDA the the April, range the investment at quarter, forma on As weighted be revolver and debt and net leverage X.X%. times notes and And cash the grade which in maturing for $X.XX buybacks. billion is Pro the to we be We to pending below was February conservative high up-front at of of X.XX investment of cost on for average

will debt debt be XX% Our XX% Over of life over rate. is debt of of over our average XXXX XX fixed weighted our matures beyond years. and

a have we our cash we to at target, our flow earliest currently material prudent until capital not we EBITDA leverage regularly leverage free XXXX So income of the don't expect how be and Charter with And the structure. consistent evaluate of unique meaning cash elsewhere is same perspective. from as $X taxpayer

We quickly can cost, strong see if in flow change permanent delever we accelerating a EBITDA growth on also refinancing or a visibility business cash increase opportunities. mechanically in had and meaning growth, we investment outlook

Charter quarter, taxes billion common the XX% also September quarter. we Charter Holdings at turning September of to X.X during totaling and During Charter's price slide an since we've of Briefly shares million XXXX $XXX repurchased on per of and In our units, average equity. repurchased share fourth about $X.X -- the XX.

Our receivables over NOL assets worth at tax $X our billion. tax Bright our House primarily arrangement composed of are and are

for intensity assets customer drive in combined we're growth. an now cash to ready to EBITDA allocation target healthy forward XXXX, will with equity and capital tax with looking we're flow flow returns. structure and capital free And So Q&A. growth free Operator, leverage and innovative revenue ROI-based cash our reasonable drive accelerating growth, and that expect capital we the an combined decline levered

Operator

from question Jonathan Street New Instructions] Research. first from will Your [Operator Chaplin come

open. is line Your

Jonathan Chaplin

for thanks Chris, tradition with and CapEx breaking guidance. giving you. Thank

extremely it's think I helpful.

may, quick questions, I Just two CapEx. if on

that is that than on mentioned this side, you've costs it dollar here? that think the we a around in you. of Or Did similarly in the Or $X level remarks as mean most with will being Should you're sort that During of now to you? non-programming future levels at CapEx of then that from now you. you bit stable aggregate mentioned would – at customer-facing all behind you efforts continue. lower cost sort CapEx continue costs got a activity terms years? for move the activity declines integration the of that there of cable reduction for path of down non-programming around these prepared could come you billion? little the even And in behind Thank

Tom Rutledge

Tom. its Jonathan, So

CapEx more That's best guidance service forward and capital that general on On going think are, how I extent, forward, beyond revenue beyond with a the to of But and fast be about think come capital efficient XXXX you're terms our growing infrastructure. depends going our in guidance down. fast efficient do intensity and opportunities continued to is the to some the will become we your how opportunities it growth that function it think that spending. of really way customer more in to

configuration a result that it will materially forward, better our as a also So which it that operating reduce ability it's transactions capital I operating to meaning cloud-based of reduces that costs, getting think your other that self-service question down lower we will leave service and about connected and as efficient us, to customers services, to we more said, general. customer provide opportunities that think That because the provides network costs. But generally experience in reduces our IP-based we'll CPE. going the of services, ability non-programming be

end margins lower and think in we up actually we with So capital a higher world intensity.

Chris Winfrey

Jonathan, down Depending thing relationships by per OpEx one you're goal to on I add case today relationship. to that, Tom The you're is we're to said. that growth, growing modeling our materially, respect customer mean, accelerate customer growth. with customer as Just relationship is to come -- if it in to X.X%, going

decline. the about talk per, relationship we when per having it's cost of a cost and in the really So material context

per bad on substantially but had going a also basis do behind point customer to think to is the an opportunity the decline that's this us, now growth year. there's year gross relationship we it and to that tied customer think I relationship fact elevated debt key cost the last I Given is and here reduce

Jonathan Chaplin

much. very Great. you Thank

Operator

from today Stanley. question Swinburne next come will Ben Your Morgan from

line is open. Your

Ben Swinburne

announcement you your is about that's part sticking a vision product. with top app CapEx. on morning. have relates you of a little that sort Apple could your it becoming your video business, Good particularly It you. recently. bit Tom, a a to of Own the Your And how talk as the customers' for I Roku. seems app Device, know just guys Thank like consuming bigger Bring

Just sort think in it theoretically do and down more on of those We then for than significant about CapEx XXXX what and And how relatively Chris, scheme to cable embracing philosophically, about you were are that the business? means change grand the step know you're we out. expecting. of the is X.X modest decline rolling but just pointing off all-digital, the in numbers

if material would term? of are to That you down helpful. other think us happened about maybe the be that step just longer numerate what the help that So over drivers just could

Tom Rutledge

All right, Ben.

a bundled services terms the the business talked the is as on in there's consistency video offer. going still in business, video the of a So primary video lot, of obviously, through about the that way which business packages we well But we lot remain changes.

I provide. going Bring our think way Own And video we we best that Your as are video opportunities we products to is that providing on in I being for be run There's And video that business great in consistent for that all And time. market to there in be up. create business mix we're embraced bringing have dictates going use drive that way. direct-to-consumer our develop. the it's using device Device to services will we continues on time to want direct-to-consumer models can same we margins new may to supermarket services, where think video vendors services consumers, in devices hardware for think provide us open the our we're to is us every business network. on make said, definitely CPE a change going. significant however, consumers incremental to And try the one through traditional are look and the CPE to want connectivity. connected video our That CPE. that together allow when that at models of the actually of simultaneously. being and a in ways core business, in and And services still think people which those video their there mix network the the us the we And our there CPE work change of to it And we space, of marketplace usage and at

Chris Winfrey

the on Ben amount the which of step significant down, already first year. this down, remitted occur start question CapEx amount the of the of in to to the going step -- quarter is

head. big of at is the some is ones DOCSIS all-digital hit complete. You the on That’s complete. now X.X now

in standardized Another of starts already two integration migration level now for of slows. thing that a done development the We've out to not of think SPP A it all same platforms able that migrating rolled activity about either but those call the them centers. apply years field where put occurred. lot tools that level. CapEx a it's that has that have some we've customers pretty big and of item the and of or and slow. and some now where We migration just also specialized equipment trucks, there's have going lower of about the is and still acquired estate on programs one been half is just call XXXX is, to the in naturally curve get SPP, to with lower. are XX% to of the I'll over It as – intense the that you further associated into when of And into lot that a center doesn't national to was a significantly tools heavy It lot those completed to big completed. XXXX. integration you mean The expenditure example. in give when order capital a being real at software spend in-sourcing there is are attached is during related would be talked operations that level still virtualized structure, of lot we've while of up you of and the there's

are wound customer inside programs forward, big trends that capital couple a winding those the per up. are There passing exist to expenditure the or or will that be expenditure relationship either business other to go that the continuing up, capital it. are So per of improve

as it of well. to OpEx ties also Some

We self-installation increasing are our rate.

that new the the we so areas as reasons lot a a an lower well impact amount CapEx. video on then both just that as of And of for CPE Tom having OpEx And mentioned that installation. are has per other

base past the they that the that in Internet and about trends SPP reduced in of So been when it's piece set-top and and that qualm a much the comes Tom other our new you that both to in deployed, That to churning are couple we just for and new of significant because the just migration talking what was video IP from have the customer ability populated context a of need capable the of marketplace. boxes with customer that you're all-digital service means so the fully a the out market years. CPE is through fact when comes that CPE replacing marketplace, really capable new on buy about go

Tom Rutledge

increasing capital add of the is also Internet. Internet that speed mix and network capability The spend the the one thing allocating would is and capital I the is do the the we the and of we're that, toward which

cost investment ability coming coming aggregate provide network to is while and business. service video in the for CPE is self home going provision capital customer are down home to all the The the up, connectivity the capability due actual home while and in the throughout down, coming relationships. in itself video intensity the the the byte to down the so cost per And are

Stefan Anninger

Thanks, we Ben. take our will next Michelle, question.

Operator

from question Doug Mitchelson The comes next Suisse. Credit from

Your open. line is

Doug Mitchelson

I much. reduced but integration Tom, the so be Any And looks completed thanks that progress it bit I early, margins previously? sort comments on systems you would the helpful. XXXX perhaps comps a on confused like look down on are advertising efforts for XQ customer at of slightly year-over-year. I'm already If better would Well, margins. seeing as Chris, be know in benefits it's per have or far interactions are customer-facing from so service

about Tom is or still and get integration But think There customers talked for which better right in hitting mentioned away have in XXXX lower and You is was XQ in that – year? I right which good margins I for it growth XXXX it churn margin. XQ good that investment is how that's, it in did the is in-sourcing better if Thanks. throughout get does the margins. progressing

Tom Rutledge

cost providing – customers manage churn also how operation from we should reductions service Those we in that reductions. infrastructure create and to quality the including to new Well, the on fourth come its saw our the customer service but that the did we the of say churn ability we're quarter life. better, on impact

consumer. scheduling less have a base And creating have in gets in from we And activity that consumer. friction them create the and a at an relationship customer service products the transactions extent low reasonable customer means per so we're less creates satisfied that a able by and life that per that to to you less you lesser the prices greater environment calls and meaning transaction cost perspective friction have we’ll that of where have average have

get can – less environment get significant you in And growth, environment. in you so without so a expensive growth a And growth environment have static a margin improvements. you

we that's the so developing why how and the business we And we see made did. investments

Chris Winfrey

that to Doug is you costs that political. guess at the included analysis on starting haven't with out backed and/or you've do question my your operating costs advertising associated either you're looking mobile QX not

the take but our didn't year-over-year. just outside if get for to with advertising So margins leading increased be where margin when out. that, were coming advertising related mobile adjusted you you But know to advertising political able political might the expense took to you out out

XXXX. goal our to of for our of the relates on growth. entire the pointed and increase to is the cable our it goal in and you XXXX side of that cable increase is to political depend side lack year margin mix year-over-year on margin XXXX, rate advertising inside product as As the some out But despite will

a organically front. good the means margin development that on So quite

cable there's As companies the connects in depending it on most relates to QX. typical QX level through quarter-to-quarter a seasonality of

drawn the rather development, our and I seasonality get full caveats So some for mentioned. I'd to year goal not subject the the into that's sequential but of

Doug Mitchelson

That’s all. All right. Thanks.

Stefan Anninger

Michelle, next Doug. question Thanks, please.

Operator

Ehrlich Jessica of America from comes Merrill from Bank question Lynch. next The Reif

line open. Your is

Jessica Reif Ehrlich

Thank you. A of questions. couple

on churn On direct-to-consumer growth for is view NBC offer is while anybody's interesting the question. of generator. really revenue expensive; News I industry. your wondering have potential the just First, at I what really mean top guess service, I'm your reducer video that it end seems been pay-TV or the advertising, it may growth your number. is

your differently? XG said views of what reaction out? broadband. on talk replace And on finally you your love Charter yesterday to get wondering So as XG about their XG, fixed will then AT&T to call that you're rolls positioning would Can doing what

Tom Rutledge

there. Sure. a lot There's

huge the they're the On and a in advertiser-generated opportunity a for think they expensive. and point NBCU creating programming I business good less there have is opportunity, services

I work a that think I details to But so out it lot sense. think there's there. And makes conceptually, of

ad CPMs of and more we a growth, those create broadcast that to the other who for to in think have created, In I terms analytics our capabilities. business model methods, business out generate advertising and sales do space advertisers money that have allows higher better therefore of don't using than advertising other us our

a interactive have two-way We unique plant.

We that now data XG, force data a And in to is more markets our ad network a will inexpensive to we've of of regard a and easy streets. very upgrade, to ability in And And out our of spaced-out With in just taking a benefit fast think as mass XXXX that that we're the that capable terms we customers about own pathway know space. to advertising we're -- announced great advantage broadband that we're XXXX. And deployments spoken of industry. to X-gig the take been also built you as our XX-gig that this the upgrade local CES of We've capabilities that symmetrical have marketplace future dictates the and is advantage the that our growth at get network across have to the going to reaped growth we XXG. And group. to of sales in highly and a television sales advertising and help on sales advertising as that. grow we effective target to publicly. wireless than throughput required. and have be rolled And consumption our so rate went to at an fixed faster we XG consumption, continue in We our will upgrade that's footprint. and to quick lot

possible effectively. look our – a capital expenditure So very work is to view, at efficient XG to perspective get as that an need the spend to fixed from essentially because business, way. of close in awful get you capital when make mobile It's not it to to to home use a we it lot XG enough actually

provide and that So with to can We're we're continue broadband network its our that consumption comfortable and than less cost better at broadband experience grow comfortable will we data rapidly capability. alternatives. a

Jessica Reif Ehrlich

Thank you.

Stefan Anninger

Thanks.

Next question please, Michelle?

Operator

comes Your Vijay from Jayant Evercore. next from question

open. Your is line

Vijay Jayant

Thanks.

by you obviously, wanted up? the Just come on Where about fight over telcos how take then, improved markets to on is a the it Spectrum taking Has versus terms broadband you product. out been and back of really your right kind video the fiber talk Thank share you. are the about your And churn the Can of last has in of Can differentiator where real alternative rollout? reducing is share? we there product really of Guide are in now? coming where year. just sort sort shifts trending a talk

Tom Rutledge

networks CPE guy architectural of which the our on as was without provide rapidly a a that the bringing a and our the So, are and for someone increment changed guide is we're rolling that the Vijay, to network us. guy But yet in that retailing is consumer. and others experience our lot data put on of in actually it guide good, experienced distributed a And most it have some our getting the and in pretty we we put We've were retailing all perspective. result we're apps out also rolling incompatible of and together transaction that increment out architecture everywhere existing our will lasting of it it's on markets our the CPE And space. for in from better. the we We that now much isn't Not CPE that significant improvement. extent. the quite but that more think guide the

devices it's those excellent packages mobile to home packages we including consumer bundled is we it'll a the and I coherent Stream our do business all which video both consumer packages way to à la earlier sell ability across in do add and to that in So think to what carte that devices. the is friendly in our said own experience an think and

operate. with shift, pretty us. exceptions more we And share share to guess some shift everywhere very of than terms generally our In we share toward continued shifting much few But is I others.

Vijay Jayant

you Great. Thank so much.

Stefan Anninger

next please. Vijay. Thanks, our Operator, question

Operator

Your next question from comes JPMorgan. Phil from Cusick

Your line is open.

Phil Cusick

from thinking Nice Legacy how Warner guys. coming I'll basis Bright about expect. in down of there. to Time Hey, us and we'd remind to is the that we're out transition compare And coming thanks Charter? see go churn churn, this churn I'm now said House what you Can and you it's

Tom Rutledge

Chris, why don't you do that?

Chris Winfrey

continues to and service So between means Otherwise Charter rate going Florida a just Bright Legacy probably market get Legacy Charter There's across the [indiscernible] the continues is still which market just have House. elevated entities year-over-year, that all the – three is that due just the [mover] Bright Charter down churn – House to lowest coming the churn exist more legacy difference Phil better. which to ratio in markets. is TWC in a churn those

Tom Rutledge

good effect. There's no

Chris Winfrey

That's right.

the differential And exists a continued churn and past a TWC better on better for other And to those so Bright there's in Charter to churn that both get Legacy there's of still long least But has over half I think the ratio. and Charter and three at many runway House. entities. rate XX% even years

Tom Rutledge

range. into put well use to just that in Charter, pricing XX% – and Legacy the But that is packaging or we SPP high the the XX

get you comes Time environment churn lower consistent interestingly, with come and down in Legacy the trends down. in Legacy while and of And churn Charter the down, that so effect Charter. seeing historic come Warner Bright House But we're

So trend improving, more significant still but the Warner. there's in whole is upside Time

Phil Cusick

versus will on the come debt debt. process Can remind sort XQ? bad first bad that derivative well. of continue was I the And us in guess to And early as where you down is

Chris Winfrey

improve. was and I to a expect reduction quarter Fourth year-over-year that

Phil Cusick

last And thing.

clear is Or on easy else XQ of comp which tough very a anything that consider… year-over-year we on are think should fourth You going was comp? quarter the as fairly subs, you'd

Chris Winfrey

most wouldn't quite the things want said programs that mean you rates that But Xst and disruption project what now mean Legacy hit there's don't non-subs seismic up the of at up that and down built because of service And we've that there's before, the make and a or these subscribe. me to existing easy in in retain stopped call slowed momentum a always saw that I January it just marketplace. has wake I comp. and Xst bit, shift say a disruption clear we lot -- or lot that Charter, January customers to an gets this Similar complete overnight. I has let a the doesn't either

quarters as time. still So And success strategy be of I I going do it. a looking to way the really of think right of think over longer it's at the long-term improvement periods operating to single isn't continuous indication

there is comp, that continue anything an comp it year-over-year. And expect easy I saying throughout don't difficult not but the it's makes improve or think year. to to we an I'm QX easier So in that

Phil Cusick

Thanks very much.

Stefan Anninger

Phil. next please. Thanks, Operator, question

Operator

The next UBS. from question comes John from Hodulik

line is Your open.

John Hodulik

voice into a talk of you Great. just way the the new of Maybe about wireline. you substituting little ramifications could your guys selling the bit if wireless

on over mean of terms does get gap non-programming terms non-programming it two initiatives is on there side at are trend on by all, in that any gap I I of larger these wrapping see are mean maybe reason in Thanks. expect say out? And your up losses cable just guys overall you that together swamped margins, the then implications? doing should Or see side? Or how right traditional do the doing that versus of all any mean, meaningful -- a margin there that guess you're you costs it the I to show accelerating And time? rate? be we you does margins, and the guys First side? close what through the run voice why And is would margins still play shouldn't duplicative competitor. we we

Tom Rutledge

less reduced transaction selling was to part as a of changed it's the bolt-on we of $XX idea yes -- has change, to mobile to seen play triple with implications speak that question. product I'll cost Yes, it in Well, mobile. a a you as wireline. We've yes. our significant model. to the wireline And it which -- than that we know with the

don't And have we substitution against think of it's our we but And to wireline what a how impact consumers. to sell-in. our of much wireline lot it's providers, a do good wireline better. to happen implications will of to some a so hard We say, general it for economic But that performance at look an has driver that performance. it's trend marketing to wireline all material relative value think change significantly a other will

Chris Winfrey

well less the both so at services. as in and always value-added not price turn good the it's roll-off point to a rate new time. time. gives $XX it as a retention $XX at And because a later think same point roll-off you discussion, I it's coming add-on over off promotion a it's attractive a And subject are to customers they tack-on in it those

$XX. our of our used implications, whereas our markets at be of terms triple is John, majority In of double-play the margin play in $XX in markets our acquisition the pricing to the majority

implications margin incremental of think don't I what basis forward doing. So we're there's on going any an dramatic

fixed and at from $XX extent the subject roll-off churn that majority it's somebody price a voice video $XX, there voice you service, tack-on markets sell and versus attractive values – add-on double not in Internet in it's in line we the an So to plus past. our of to the the would've mobile of play some seen the

similar large-scale and, of margins us the cable I able only cable see over prevents anything to cable don't being another gap, The between us from terms In margin time. for that example, operator get overhead there. it's are costs of caveat, means for at inside. and say, us, a that play] you operator, all are embedded cable look which cable we the When corporate is our I'd [triple

a Rutledge a whole businesses cable the we a is inside And conglomerate se. be if different of bit dissimilarity had Chris Tom equivalents which and business were so and Winfrey per of and But... inherent, there's a host wouldn't

Tom Rutledge

going getting to – margins But we're not not much. that on

Chris Winfrey

No.

So that’s good.

So our despite notion, was and thought year-over-year that. margins business over view we could general that's always I'd add. be But ability to, increases there think the to an thing EBITDA cost a a programming generate I on as that having in said cable that only we've XX% in

Tom Rutledge

business. growth a be still And

Chris Winfrey

our on be that growth business Still a and hasn't view changed.

John Hodulik

Okay, great. guys. Thanks

Stefan Anninger

one we have time Operator, for John. please. question, Thanks, last

Operator

Okay.

question today final will come Amy from our Yong from So Macquarie.

open. line Your is

Amy Yong

Can just the pushed to parts. us process. guess, help voice There looks through you're a the following sales through forward? moving on going lot retooling think seems I like just It Chris, Thanks. up be you you ARPU obviously also question. a but surcharge, of

Just going wondering you. about forward. should we think Thank how

Chris Winfrey

pretty the I these products way look for customer to there. to simple. per then a said what's and look Yeah. Look, with GAAP going is anything, that the the allocation it's of what might And ARPU. to revenue could itself. And changed take a think just I trend relationship much happening is at when John, given to don't voice think amongst I, slightly From a hornet's down years, you you said argue it the that a take customer ARPU I at relationship it's But perspective, have be nest. total If relationship on get ARPU that, best positive. impact

attractive, impact is to the And sell-in, it's of just You of one even per the easy that rate model I in roll-off, products mentioned. that the is Internet sell, pretty have big your the folds which other have promotional has relationship to ARPU. which have offset pricing that of is you increases. single-play the bundle though amount there lowering the biggest any the you factors of the And you

ARPUs, try it's I sure GAAP I to a I'm deep public. individual think line to model not the question. So because if useful that's pretty not product would allocation

is look the relationship which is opposed ARPUs that think as customer why it, I some at the we the about to way of talked to others.

Amy Yong

you. Thank it. Got

Stefan Anninger

call. Amy. our That concludes Thanks everyone. Thanks,

Tom Rutledge

Thank you, everyone.

Chris Winfrey

Thank you.

Operator

will conference conclude This Thank call. you, everyone. today's

now You may disconnect.

Charter Communications (CHTR) 31 Jan 192018 Q4 Earnings call transcript