10-KPeriod: FY2012

CHARTER COMMUNICATIONS, INC. /MO/ Annual Report, Year Ended Dec 31, 2012

Filed February 22, 2013For Securities:CHTR

Summary

Charter Communications, Inc. reported total revenues of $7.5 billion for the year ended December 31, 2012. The company is a significant provider of cable services in the United States, offering video, internet, and telephone solutions to residential and commercial customers. While the company experienced growth in its internet and commercial services segments, video revenues remained flat year-over-year, impacted by increasing programming costs and competition from DBS and telephone companies. Charter incurred a net loss of $304 million for the year, largely attributable to significant interest expenses on its substantial debt load of approximately $12.8 billion, along with depreciation and amortization expenses. The company is actively working to improve its product offerings and customer experience, including expanding digital and HD capabilities and simplifying pricing. A notable recent event is the February 2013 agreement to acquire Bresnan cable systems for $1.6 billion, indicating a strategy of inorganic growth. However, investors should remain aware of the substantial debt burden and the competitive pressures in the cable and telecommunications industries.

Financial Highlights

47 data points
Beta

Revenue

$7.50B

Net Income

-$304.00M

-4.1% Net Margin

EPS (Diluted)

$-3.05

Total Assets

$15.60B

Cash & Equivalents

$7.00M

Free Cash Flow

$131.00M

Financial Statements
Beta
Revenue$7.50B
Operating Expenses$6.59B
Operating Income$915.00M
Interest Expense$907.00M
Net Income-$304.00M
EPS (Basic)$-3.05
Shares Outstanding (Basic)99.66M

Key Highlights

  • 1Total revenue for the year ended December 31, 2012, was $7.5 billion.
  • 2The company experienced growth in residential Internet (25% of revenue) and commercial services (9% of revenue), while video services (48% of revenue) remained flat.
  • 3Charter Communications has a significant debt load, with total debt amounting to approximately $12.8 billion as of December 31, 2012.
  • 4The company incurred a net loss of $304 million for the year.
  • 5Charter is focused on improving customer experience through product enhancements, digital migration, and simplified pricing strategies.
  • 6A significant strategic move announced in February 2013 is the acquisition of Bresnan cable systems for approximately $1.6 billion, pending regulatory approval.
  • 7Programming costs remain a substantial operating expense, increasing year-over-year and impacting operating margins.

Frequently Asked Questions

In 2012, Charter's main sources of revenue were video services (48% of total revenue), followed by internet services (25%), telephone services (11%), commercial services (9%), and advertising sales (4%).

Charter reported $7.5 billion in revenue for 2012 but incurred a net loss of $304 million. The company carries a substantial debt of approximately $12.8 billion, which leads to significant interest expenses. While revenue grew overall, driven by internet and commercial services, the large debt and net loss are key considerations for investors regarding financial health.

Charter's strategy involves improving its existing service offerings with advanced features like HD and DVR, simplifying pricing, and enhancing customer experience. They are also pursuing inorganic growth, as evidenced by the announced acquisition of Bresnan cable systems. The company is also focusing on expanding its commercial services segment. They face significant competition from DBS providers and telephone companies that are increasingly offering bundled services.

Key risks include the substantial amount of debt and associated interest expenses, intense competition from DBS and telcos, increasing programming costs that are difficult to pass on to customers, reliance on technology and the need for ongoing capital expenditures, and the evolving regulatory landscape for the cable industry.