Shares of Charter Communications fell over 13% on Friday as the cable giant missed Wall Street earnings expectations for its second quarter of 2025, continued to bleed pay TV customers and lost 117,000 Internet customers.
Total revenue grew 0.6% to $13.8 billion, boosted by growth of 24.9% in residential mobile and 2.8% growth in residential Internet revenues but offset by lower residential video and advertising sales revenues. Video revenue fell 10% to $3.5 billion, driven by a higher mix of lower priced video packages, $67 million in costs for programmer streaming applications and “more unfavorable bundled allocation” year over year, offset by price increases.
The company shed 80,000 pay TV customers during the quarter for a total of 12.6 million. But the decline marked an improvement from a loss of 408,000 video customers during the same period a year ago, driven by new pricing and packaging launched in September and the early benefits from the inclusion of streaming services in Spectrum’s expanded basic packages.
Spectrum TV Select packages currently offer the ad-supported versions of Disney+, ESPN+, HBO Max, Paramount+, Peacock, AMC+, ViX and Tennis Channel, with ESPN Unlimited, Hulu, Discovery+ and BET+ slated to launch later this year. Charter began launching a la carte streaming apps to customers without traditional video packages in July, including broadband only. It also plans to launch its video marketplace in the coming months, where users will be able to manage their streaming apps in one place.
Advertising sales revenue fell 6.7% to $371 million, primarily driven by lower core and political revenue. Excluding political revenue, ad sales revenue fell 4.4% driven by a challenged local and national ad market, offset by higher advanced ad revenue and better inventory selling capabilities.
Here are the quarter’s results:
Net income: $1.3 billion, up 5.7% from $1.2 billion a year ago.
Revenue: $13.8 billion, a 0.6% year-over-year increase, compared to $13.76 billion expected by analysts surveyed by Yahoo Finance.
Earnings per share: $9.18 per share, compared to $9.66 per share expected by analysts surveyed by Yahoo Finance.
Adjusted EBITDA: $5.7 billion, up 0.5% year-over-year from $5.67 billion a year ago.
The latest quarterly results come as Charter previously revealed plans to merge with the privately-held Cox Communications in a $34.5 billion deal to create a mobile, broadband and video giant.
The combined company, which will change its name to Cox Communications within a year after closing, was expected to have a total of 35.9 million Internet customers, 14.4 million video customers, 10.6 million mobile lines and 7.6 million voice customers as of the first quarter of 2025, per an investor presentation. Charter and Cox expect to generate $500 million in cost savings within three years after the deal’s closing.
In a public interest statement filed with the Federal Communications Commission, the companies said the deal would increase choice and give consumers in Cox’s footprint the ability to lower their monthly bills by choosing Charter plans, improve the combined company’s scale for investment, build a strong competitor to Big Tech and advance quality career opportunities and growth for American workers.
Charter is also set to acquire Liberty Broadband. Under the terms of that deal, which is expected to close at the same time as the Cox deal, Liberty Broadband shareholders will receive 0.236 of a share of Charter common stock for each share of Liberty Broadband common stock held, with cash to be issued in lieu of fractional shares. Charter expects to retire roughly 45.6 million shares currently owned by Liberty Broadband and to issue roughly 34 million shares to holders of Liberty Broadband stock.
Despite losing 117,000 Internet customers for a total of 29.9 million, the segment’s revenue grew by 2.8% year-over-year to $6 billion, driven by “promotional rate step-ups, rate adjustments and a favorable change in bundled revenue allocation year-over-year.”
Mobile service revenue grew 24.9% to $921 million as the company added 500,000 mobile lines during the quarter for a total of 10.9 million, offset by “less favorable bundled revenue allocation” year-over-year. Other revenue grew 18.9% to $839 million, driven by higher mobile devices sales and a one-time benefit.
“Absent [the Affordable Connectivity Program], we have not seen a material change in the competitive landscape,” Charter CEO Chris Winfrey told analysts on Friday. “We remain confident that we’ll return to Internet customer growth over time through our operating strategy of delivering the best networks and products at the best value for customers, combined with unmatched service.”
Looking ahead, Charter expects to grow EBITDA for full year 2025, but warned the third and fourth quarters would be pressured due to last year’s political advertising strength. Chief financial officer Jessica Fischer noted a $13 million headwind due to storms and tornadoes in the St. Louis area, Ohio and the broader Midwest.
It also expects approximately $11.5 billion in capital expenditures for full year 2025, down from previous guidance of $12 billion, reflecting the timing of “network evolution spend and lower commercial and subsidized rural line extensions spend.” The majority of the $500 million shortfall will be spent in 2026, Fischer said, and 2025 will be the company’s “peak capital spend” year.
Additionally, the company now expects that cash tax payments in calendar year 2025 will total just over $1 billion, down from a range of $1.6 billion to $2 billion, citing new federal tax legislation.
“The new tax legislation will ultimately save us several billion dollars in cash taxes over the next five years, helping to finance our capital expenditures and investments and supporting our free cash flow for at least the next five years, while creating higher free cash flow per share, essentially permanently,” Fischer added. “We appreciate the efforts of the President Trump and Congress to restore these key business tax provisions, which will provide capital intensive companies like ours the visibility to continue pursuing our long term investments, including the significant investments we will make in the Cox network, driving benefits for customers and employees and improving our competitiveness.”
Charter stock is up 3% in the past year, but down 6% year to date.
