Cable television cable cut afflictions grow, highlighting the divergence with Netflix



The pace of the cut of pay television is accelerating, and the earnings results this week for the cable and telecommunications companies underscore how that fundamental change in consumer behavior gives even more power to technological giants like Netflix Inc.

Charter Communications
Inc.,


CHTR -11.68%

the third largest US pay television provider. UU By subscribers, he said on Friday he lost 122,000 video customers in the first quarter, a result far worse than the 40,000 subscriber losses expected by Wall Street analysts. In the period of the previous year, Charter lost 100,000 customers.

The results unleashed a selloff that sent Charter shares 12%, the largest percentage decline in a single day since 2009. Charter's results follow similar negative reports on the subscriber's bead cut this week. your biggest rivals,

Comcast
Corp.


CMCSA -4.56%

and

AT & T
Inc.


T -0.18%

As viewers flee from traditional television for video streaming services, Netflix has possibly been the biggest winner, adding subscribers to the home and abroad in a clip that has exceeded Wall Street expectations.

Other technology companies are looking to capitalize on the changing habits of consumers.

Amazon.com
Inc.


AMZN 3.60%

now has more than 100 million customers for its Prime subscription service, which includes a video that offers the company has been investing money, including yesterday with a agreement to maintain transmission of NFL games. Google Inc. is increasing its YouTube TV broadcast service, an online package of cable channels that competes with products like Hulu Live and Sony PlayStation Vue. Y

Facebook
Inc.


FB -0.33%

and

Apple
Inc.


AAPL -1.16%

have reserved up to $ 1 billion for original programming intended to attract more viewers away from traditional television.

Investors are increasingly concerned about such services steal market share, said the analyst at Guggenheim Securities

Michael Morris,

which leads some to sell traditional slow-growing cable and telecommunications and buy technological stocks.

"Companies like Amazon and Netflix offer a convenience that changes the game at incredibly efficient prices," said Morris. "As an investor, you say: I do not know how this works, but I do know that it's very difficult to compete if my competitor is undermining me in the price aspect."

The agitation in payment The television economy is hard. From the beginning of 2015 until the end of last year, nine million Americans cut the cable or decided not to buy a traditional cable package when they moved to new homes, according to MoffettNathanson estimates.

Comcast said on Wednesday that it lost cable television customers for the fourth consecutive quarter due to increased competition from cheaper online TV services, and AT & T reported that it decreased its revenues due to the growth in its service. DirecTV Now transmission failed to compensate satellite customers with higher value desertions.

Verizon Communications
Inc.


VZ 3.64%

said it lost 22,000 Fios video clients in the quarter, compared to a loss of 13,000 a year earlier, although the company has decreased its emphasis on its product traditional TV and tried to pivot digital media in recent years.

The results have shaken investors' confidence that the growth of broadband customers of large telecommunications companies will compensate for the decreases in cable cutting as time passes. Charter said the growth of broadband customers slowed, echoing a trend on Comcast and AT & T. Charter added 331,000 high-speed Internet customers, compared to an aggregate of 428,000 a year ago.

Investors are also concerned that the cable giants do not have the right assets and scale to defend themselves against the global technological giants. Comcast tries to address that, in part, with a recent offer for European pay-TV operator Sky PLC, but its investors are lukewarm with the idea.

"Currently, cable is out of your favor, largely because of Comcast's extracurricular activities," wrote the veteran Wall Street analyst.

Craig Moffett

in a research note on Friday.

Growing concerns about cable and telecommunications companies have erased fragments of the market values ​​of Comcast, Charter and AT & T. Since early February, Charter has lost nearly $ 30 billion in market value, and AT & T has lost almost $ 50 billion. The market value of Comcast has decreased by almost $ 50 billion since the end of January.

Charter's results on Friday weighed other industry shares.

Dish Network
Corp.


DISH -5.62%

shares fell more than 5%, while Comcast lost more than 4% and

Liberty Global


LBTYA -6.09%

The PLC fell more than 6%.

Meanwhile, Netflix has continued to grow. Its already expensive shares have increased more than 62% this year, adding $ 52 billion to its market value.

Traditional players such as AT & T and Dish have aggressively promoted their streaming services DirecTV Now and Sling TV, respectively, but the growth in those offers has not offset the increasing losses of satellite television customers. Even with online cable television services added to the mix, 4.5 million Americans have stopped buying pay-TV packages since 2015, according to estimates by MoffettNathanson.

In a call with analysts on Friday morning, the CEO of Charter

Tom Rutledge

He said that the optimistic vision of the company for its future growth has not changed. Charter executives continue to point to the ongoing integration of Time Warner Cable and Bright House Networks, which Charter acquired in 2016, as a major source of much of the weakness in subscriber outcomes.

Mr. Rutledge said that integration has some unequal aspects since we combine companies in several ways, but added that "integration is actually going quite well and as planned."

While the results of subscribers disappointed investors, Charter increased profits of 8% to $ 168 million in the quarter, and overall revenues grew by 5% to $ 10.7 billion, helped by revenue growth broadband, increases in cable bills and the growth of advertising revenue. Earnings per share increased to 70 cents from 57 cents a year ago. Earnings and revenue fell short of Wall Street estimates of 98 cents per share with revenues of $ 10.8 billion, according to analysts polled by Thomson Reuters.

Write to Shalini Ramachandran at shalini.ramachandran@wsj.com

.


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