Charter has moved millions of customers to new—and often higher—pricing (2024)

Charter Communications has moved 30 percent of the customers it acquired in a blockbuster merger onto new pricing plans, resulting in many peoplepaying higher prices.

Charter closed theacquisitions of Time Warner Cable (TWC) and Bright House Networks in May 2016. Before the merger, Charter had about 6.8 million customers; afterward, Charter had 25.4 million customers in 41 states and became the second-largest US cable company after Comcast.

The merger was quickly followed by customer complaints about pricing in the acquired territories. In November 2016, we notedthat "tens of thousands of ex-Time Warner Cable video subscribers have canceled their service since the company was bought by Charter, and pricing changes appear to be the driving factor." At the time,Charter CEO Thomas Rutledge explained that the TWC video customer base was "mispriced" and needed to be moved "in the right direction."

Charter came up with new prices and packages, and many customers saw their bills rise when their previous discounts expired and they were switched to non-promotional pricing.Now, 30 percent of the ex-TWC and ex-Bright House customers are paying different—and often higher—prices.

70 percent to go

Rutledge provided theupdate in an earnings call last week(hat tip to FierceCable). According to a Seeking Alpha transcript, Rutledge said:

In June, we finished the rollout of our new pricing, packaging, and branding across our national footprint with the last launch of Spectrum in Hawaii. We now offer a simple, straightforward, high-value product using a consistent and uniform approach across our 50 million passings under one brand, Spectrum.

The new product is succeeding with consumers across our footprint. In the second quarter, our customers and PSU [primary service unit] connects were higher year-over-year. And as of the end of the second quarter, 30 percent of Time Warner Cable and Bright House legacy customers were in our new pricing and packaging, up from 17 percent at the end of last quarter. In areas where we've had Spectrum in place for at least three quarters, 43 percent of our residential customers have Spectrum package products.

We asked Charter for details on how many customers are paying higher prices than before,but the company said it would not offer those numbers. "These customers have chosen to move into these packages, which provide a greater value compared to legacy packages," a Charter spokesperson told Ars.

The pricing changes also affected customers who were with Charter before the merger. "Progression of product and package migration is virtually identical to what we saw at Legacy Charter," Rutledge said.

Charter addsInternet customers, loses TV subscribers

Charter's total customer relationships increased by 211,000 duringQ2 2017. Charter has 26.8 million residential and business customers subscribed to at least one of the three triple-play services, the company's earnings release said. About 25.3 million of those are residential.

Charter lost 90,000 residential TV subscribers in the quarter, while gaining 231,000 Internet subscribers and 14,000 phone customers. Charter now has 22 million residential Internet subscribers, 16.6 million TV subscribers, and 10.4 million phone subscribers.

Charter's average monthly revenue per residential customer was $109.46, upfrom$109.11 the previous quarter. The number is slightly down from a year ago, when average customer revenue was $109.74. (Comcast raised its revenue per cable customer from $149.83 to $151.19 per month between the first and second quarter.)

Charter wants to raise that average, but the increases in prices for some customers have been offset in part by customers buying Internet accessby itself without TV and phone service. "[P]romotional rate step-ups and modest rate adjustments were offset by continued single-play Internet sell-in and the migration of Legacy TWC and Legacy Bright House customers to higher-value Spectrum pricing and packaging," Charter said.

The price changes for ex-TWC customers have resulted in many news stories. One such piece in theLexington Herald Leader of Kentucky in April profiled a customer who suddenly noticed that some of his TV channels were missing and replaced by "a small block of text advising him that his subscription no longer provided those channels." The article says:

A Spectrum representative told [the customer, Daniel] Fitzgerald that he hadn't been paying Time Warner [Cable] enough for the standard cable package. If he wanted those channels back, his monthly bill for cable and Internet would jump from $103 to $139, effective immediately.

Also, he would need to pay a $24 service fee for a technician to replace his old Time Warner Cable box, which worked fine an hour earlier, with a new Spectrum cable box.

Problems in Lexington were also detailed inThe New Yorker. Lexington officials havescheduled a public hearing to evaluate Charterlater this month, but "the city’s franchise agreement and federal communications law gives the city little leverage with the cable company," theHerald Leader wrote.

Disclosure: The Advance/Newhouse Partnership, which owns about 13 percent of Charter, is part of Advance Publications. Advance Publications owns Condé Nast, which owns Ars Technica.