CHTR: Quick thoughts following the call
We have been running through some quick analysis following Charter’s presentation on the carriage dispute with Disney. We assumed, for the purposes of the analysis, that the break is permanent. We estimate that Charter may be putting 2% of EBITDA at risk at the outset.This has to be balanced by something we haven’t been able to quantify yet: the increased churn that would have ensued if Charter had pushed through the price increase that Disney demanded, and the long-term
damage this would have inflicted on their brand and on their relationship with their customers. Management claims that the net of these two impacts is zero. We buy it.
If the break proves permanent, we suspect Charter will be a more valuable business over time because of it. Unfortunately, the near-term impact will obscure the steady improvement in broadband subscribers and EBITDA growth that we had anticipated in 2H23 and 2024.
We run through all the analysis to support this view in this note. We also briefly run through the implications for pay-tv providers, broadband providers, wireless companies, content, and Comcast (who is all of the above).
Charter Communications is a holding company. Through its subsidiaries, the company is a cable operator and a broadband communications company providing video, Internet and voice services. The company also provides its mobile service to residential customers. In addition, the company sells video and online advertising inventory to local, regional and national advertising customers and communications and managed solutions to enterprise customers. The company also owns and operates regional sports networks and local sports, news and community channels. The company owns and operates a two-way telecommunications network which passes various households and small and medium businesses across United States.
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