CHTR - Charter Communications

[vince]

Craig Moffett on Comcast:

 

https://www.investopedia.com/news/comcast-should-buy-charter-moffettnathanson/?partner=YahooSA&yptr=yahoo

 

“Comcast’s bid for Sky at 14x Ebitda is impossible to justify versus the always-available alternative of buying back stock at what is now less than 7x EBITDA…a multiple that to us looks too low.”

I absolutely agree with him but this guy changes his mind every month.  For someone that focuses exclusively on Media and Cable, he doesnt impress

[Munger_Disciple]

I absolutely agree with him but this guy changes his mind every month.  For someone that focuses exclusively on Media and Cable, he doesnt impress

 

Agreed. I recall Moffett was quite skeptical of Cable One's thesis that video has no margin for a long time until they were proven right. But he is right I think about Sky. I also think Jonathan Chaplin is a better media/cable analyst.

[vince]

I absolutely agree with him but this guy changes his mind every month.  For someone that focuses exclusively on Media and Cable, he doesnt impress

 

Agreed. I recall Moffett was quite skeptical of Cable One's thesis that video has no margin for a long time until they were proven right. But he is right I think about Sky. I also think Jonathan Chaplin is a better media/cable analyst.

only 6 months ago i think he was negative about comcast and charter.  I guess he was proven right cause their prices have fallen but i remember the narrative and it was amateurish and/or short sighted.  maybe he gets paid more to flop around.  Thanks for the other name

[DooDiligence]

I absolutely agree with him but this guy changes his mind every month.  For someone that focuses exclusively on Media and Cable, he doesnt impress

 

Agreed. I recall Moffett was quite skeptical of Cable One's thesis that video has no margin for a long time until they were proven right. But he is right I think about Sky. I also think Jonathan Chaplin is a better media/cable analyst.

 

Nice interview with Chaplin re: Comcast, Disney, Fox, etc.

 

[scorpioncapital]

In my opinion, content is not a good business. It's flaky, subject to fad, you don't know who the winner or loser is..some specialty content may have some future , eg Olympics, F1, discovery. But I rather be in distribution. You at least know the boundaries of your risks. I think charter strategy is wise. I don't think Comcast buying up content and mixing it up with distribution will be a wise choice. Debt makes everything look brilliant until it's not.

[DooDiligence]

On another note,

 

https://www.bloomberg.com/news/articles/2018-07-20/mets-stakes-owned-by-comcast-charter-said-to-hit-the-market

[Deepdive]

Doesn't seem like this will move the needle for CHTR given that the whole Mets is worth $2.1bn. What's CHTR's ownership stake?

[DooDiligence]

Doesn't seem like this will move the needle for CHTR given that the whole Mets is worth $2.1bn. What's CHTR's ownership stake?

 

"With the Mets now worth $2.1 billion, according to Forbes, the 4 percent stakes would theoretically be worth $80 million apiece."

 

Pocket change.

 

Still an interesting story.

 

https://nypost.com/2018/07/20/minority-owners-said-ready-to-sell-10-percent-stake-in-ny-mets/

[Liberty]

CHTR Q2:

 

http://ir.charter.com/phoenix.zhtml?c=112298&p=irol-newsArticle&ID=2360886

 

Key highlights:

 

As of June 30, 2018, Charter had 27.6 million total customer relationships and 52.9 million total PSUs.

 

Second quarter total residential and SMB customer relationships increased 196,000, compared to 213,000 during the second quarter of 2017. Over the twelve months ended June 30, 2018, total residential and SMB customer relationships grew by 3.3%.

 

In the second quarter, total residential and SMB video, Internet and voice customers increased by 202,000, as compared to 246,000 during the second quarter of 2017.

 

Second quarter revenues of $10.9 billion grew 4.8%, as compared to the prior year period, driven by residential revenue growth of 4.6%, commercial revenue growth of 4.4%, and advertising revenue growth of 12.0%.

 

Second quarter Adjusted EBITDA1 of $4.1 billion grew 5.3% year-over-year, and 6.2% when excluding second quarter mobile costs.

Net income attributable to Charter shareholders totaled $273 million in the second quarter, compared to $139 million during the same period last year.

 

Second quarter capital expenditures totaled $2.4 billion compared to $2.1 billion during the second quarter of 2017, primarily driven by in-year timing differences and Charter's all-digital and Internet speed increase initiatives. Second quarter capital expenditures included $88 million of all-digital costs and $53 million of mobile launch costs.

 

During the second quarter, Charter purchased approximately 6.4 million shares of Charter Class A common stock and Charter Communications Holdings, LLC ("Charter Holdings") common units for approximately $1.9 billion.

[DooDiligence]

CHTR Q2:

 

http://ir.charter.com/phoenix.zhtml?c=112298&p=irol-newsArticle&ID=2360886

 

Key highlights:

 

As of June 30, 2018, Charter had 27.6 million total customer relationships and 52.9 million total PSUs.

 

Second quarter total residential and SMB customer relationships increased 196,000, compared to 213,000 during the second quarter of 2017. Over the twelve months ended June 30, 2018, total residential and SMB customer relationships grew by 3.3%.

 

In the second quarter, total residential and SMB video, Internet and voice customers increased by 202,000, as compared to 246,000 during the second quarter of 2017.

 

Second quarter revenues of $10.9 billion grew 4.8%, as compared to the prior year period, driven by residential revenue growth of 4.6%, commercial revenue growth of 4.4%, and advertising revenue growth of 12.0%.

 

Second quarter Adjusted EBITDA1 of $4.1 billion grew 5.3% year-over-year, and 6.2% when excluding second quarter mobile costs.

Net income attributable to Charter shareholders totaled $273 million in the second quarter, compared to $139 million during the same period last year.

 

Second quarter capital expenditures totaled $2.4 billion compared to $2.1 billion during the second quarter of 2017, primarily driven by in-year timing differences and Charter's all-digital and Internet speed increase initiatives. Second quarter capital expenditures included $88 million of all-digital costs and $53 million of mobile launch costs.

 

During the second quarter, Charter purchased approximately 6.4 million shares of Charter Class A common stock and Charter Communications Holdings, LLC ("Charter Holdings") common units for approximately $1.9 billion.

 

yay

[gokou3]

CHTR Q2:

 

http://ir.charter.com/phoenix.zhtml?c=112298&p=irol-newsArticle&ID=2360886

 

Key highlights:

 

As of June 30, 2018, Charter had 27.6 million total customer relationships and 52.9 million total PSUs.

 

Second quarter total residential and SMB customer relationships increased 196,000, compared to 213,000 during the second quarter of 2017. Over the twelve months ended June 30, 2018, total residential and SMB customer relationships grew by 3.3%.

 

In the second quarter, total residential and SMB video, Internet and voice customers increased by 202,000, as compared to 246,000 during the second quarter of 2017.

 

Second quarter revenues of $10.9 billion grew 4.8%, as compared to the prior year period, driven by residential revenue growth of 4.6%, commercial revenue growth of 4.4%, and advertising revenue growth of 12.0%.

 

Second quarter Adjusted EBITDA1 of $4.1 billion grew 5.3% year-over-year, and 6.2% when excluding second quarter mobile costs.

Net income attributable to Charter shareholders totaled $273 million in the second quarter, compared to $139 million during the same period last year.

 

Second quarter capital expenditures totaled $2.4 billion compared to $2.1 billion during the second quarter of 2017, primarily driven by in-year timing differences and Charter's all-digital and Internet speed increase initiatives. Second quarter capital expenditures included $88 million of all-digital costs and $53 million of mobile launch costs.

 

During the second quarter, Charter purchased approximately 6.4 million shares of Charter Class A common stock and Charter Communications Holdings, LLC ("Charter Holdings") common units for approximately $1.9 billion.

 

The $296.9 average buyback price was rather high relative to the price action during Q2, and it indicates that the company had been buying throughout April which is typically a blackout period for pending Q1 earning release.

[Liberty]

The $296.9 average buyback price was rather high relative to the price action during Q2, and it indicates that the company had been buying throughout April which is typically a blackout period for pending Q1 earning release.

 

Your number might look high because of rounding. The actual average price that they gave is $290.11:

 

 

[Spekulatius]

One thing to note is that CHTR bumps against it self imposed leverage limit if 4.5x EBITDA), actual vale is 4.47). So, I don’t think we see a lot of buybacks this ongoing quarter.

[HalfMeasure]

One thing to note is that CHTR bumps against it self imposed leverage limit if 4.5x EBITDA), actual vale is 4.47). So, I don’t think we see a lot of buybacks this ongoing quarter.

 

They were at 4.46x at the end of Q1, meaning they didn't materially increase leverage in Q2 yet bought back the number of shares that they did.

[vince]

One thing to note is that CHTR bumps against it self imposed leverage limit if 4.5x EBITDA), actual vale is 4.47). So, I don’t think we see a lot of buybacks this ongoing quarter.

 

They were at 4.46x at the end of Q1, meaning they didn't materially increase leverage in Q2 yet bought back the number of shares that they did.

 

Incremental increases in ebitda and newly minted free cash flow allow for meaningful increases in buybacks

[Liberty]

Writeup on CHTR after Q2:

 

http://www.yetanothervalueblog.com/2018/08/some-updated-thoughts-on-charter-post_1.html

[HalfMeasure]

One thing to note is that CHTR bumps against it self imposed leverage limit if 4.5x EBITDA), actual vale is 4.47). So, I don’t think we see a lot of buybacks this ongoing quarter.

 

They were at 4.46x at the end of Q1, meaning they didn't materially increase leverage in Q2 yet bought back the number of shares that they did.

 

Incremental increases in ebitda and newly minted free cash flow allow for meaningful increases in buybacks

 

Ding ding ding

[Munger_Disciple]

Comments from Rutledge about Verizon fixed wireless 5G build on the conf. call yesterday:

 

With regard to 5G, I look at what Verizon has announced as a kind of a conventional overbuild. Small cells require, essentially, a fiber optic cable system to supply them. So there's a lot of capital intensity with that kind of build. Their projection was to build 30 million passings in the United States over 10 years, which, if you believe that's going to happen, then 40% of those approximately would be in our footprint, if they deploy them with any kind of random distribution. And so you could do the math of what kind of penetrations you might achieve with a met-too product delivered wirelessly over a 10-year period in 12 million passings.

 

So I think it's a difficult process to use 5G as essentially as a wireless drop and it requires having all of the physical assets underneath that. So it's very capital-intensive and maybe as much or more capital-intensive than the conventional fiber build, like Google attempted.

[walkie518]

Advance/Newhouse Notifies Charter of Intent to Establish Credit Facility Collateralized by Stake in Charter Communications Holdings, LLC

 

STAMFORD, Conn., Aug. 6, 2018 /PRNewswire/ -- Charter Communications, Inc. (CHTR) (along with its subsidiaries, "Charter") today announced that Advance/Newhouse ("A/N") has notified Charter that A/N intends to establish a credit facility collateralized by a portion of A/N's Common Units in Charter Communications Holdings, LLC. A/N has also indicated to Charter that A/N remains committed to being a long-term shareholder of Charter and currently has no intent to sell any units/shares other than through its continued pro-rata participation in Charter's buyback program.

 

this appears to be a fairly massive vote of confidence...curious what they intend to do with the proceeds? 

[Munger_Disciple]

this appears to be a fairly massive vote of confidence...curious what they intend to do with the proceeds?

 

Why do you think it is a massive vote of confidence? It seems that A/N is just taking a margin loan by pledging a portion of their Charter common units.

[walkie518]

this appears to be a fairly massive vote of confidence...curious what they intend to do with the proceeds?

 

Why do you think it is a massive vote of confidence? It seems that A/N is just taking a margin loan by pledging a portion of their Charter common units.

 

Charter is at the early stages of what Liberty Global has nearly entirely accomplished.  Malone et al likely have an idea of what the next few quarters will look like. 

 

There are certainly a lot of bad investors out there, but someone like Malone doesn't margin a sinking ship.

[Liberty]

this appears to be a fairly massive vote of confidence...curious what they intend to do with the proceeds?

 

Why do you think it is a massive vote of confidence? It seems that A/N is just taking a margin loan by pledging a portion of their Charter common units.

 

Charter is at the early stages of what Liberty Global has nearly entirely accomplished.  Malone et al likely have an idea of what the next few quarters will look like. 

 

There are certainly a lot of bad investors out there, but someone like Malone doesn't margin a sinking ship.

 

A/N isn't John Malone, though:

 

https://en.wikipedia.org/wiki/Advance_Publications

[walkie518]

this appears to be a fairly massive vote of confidence...curious what they intend to do with the proceeds?

 

Why do you think it is a massive vote of confidence? It seems that A/N is just taking a margin loan by pledging a portion of their Charter common units.

 

Charter is at the early stages of what Liberty Global has nearly entirely accomplished.  Malone et al likely have an idea of what the next few quarters will look like. 

 

There are certainly a lot of bad investors out there, but someone like Malone doesn't margin a sinking ship.

 

A/N isn't John Malone, though:

 

https://en.wikipedia.org/wiki/Advance_Publications

 

I was under the impression they are working together?

[Liberty]

 

I was under the impression they are working together?

 

Legacy Charter bought Time Warner Cable and the cable systems of Advance/Newhouse at the same time, and A/N retained some ownership in the New Charter (basically, they took a bunch of stock in NewCo as payment). They've been maintaining their % by selling back into the company's buybacks.

[walkie518]

 

I was under the impression they are working together?

 

Legacy Charter bought Time Warner Cable and the cable systems of Advance/Newhouse at the same time, and A/N retained some ownership in the New Charter (basically, they took a bunch of stock in NewCo as payment). They've been maintaining their % by selling back into the company's buybacks.

 

if they are borrowing against their stake then it's unlikely that they continue on that path?