Charter, Adelphia Reduce Forecasts
WASHINGTON — Charter Communications Inc. and Adelphia Communications Corp., two of the nation’s largest cable businesses, cut financial forecasts after losing subscribers to satellite television rivals.
Charter, ranked fourth in size among U.S. cable companies, estimated that cash flow would be lower during the fourth quarter than some analysts had predicted. Adelphia, the nation’s sixth-largest cable business, cut its full-year estimate for a similar category by 16%.
Both companies have lagged behind cable-industry rivals in upgrading their systems to offer more channels and services such as high-speed Internet access and video on demand, analysts said. Satellite television companies such as DirecTV Inc. and EchoStar Communications Corp. are exploiting this weakness to win market share.
“Satellite is doing very well in attacking underserved and un-upgraded cable” companies, said Alan Bezoza, a cable services and equipment analyst for CIBC World Markets.
Adelphia, which has been the subject of an accounting scandal involving its founders -- the Rigas family -- reported in a filing with the Securities and Exchange Commission that its bankruptcy filing in June had disrupted company marketing efforts. The lapse, according to the filing, negatively affected “customer acquisition and retention” and encouraged satellite competitors “to increase their marketing targeted” at Adelphia subscribers.
Other cable operators have better withstood the challenge, in part because they have upgraded a larger percentage of their systems to digital cable that operates at a bandwidth of 750 megahertz, permitting more channels and services to flow to customers.
Adelphia reported Tuesday that it lost 70,000 customers during the third quarter. The number of basic subscribers was 5.78 million as of Sept. 30, down from 5.85 million on June 30. Charter has lost almost 400,000 cable subscribers this year.
Adelphia shares fell half a cent to 11.5 cents in over-the-counter trading. Charter shares fell 27 cents to $1.18 on Nasdaq.
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