Charter: Still A Big Cable Risk

Charter Communications (CHTR) is up 7% at the open to $3.50, which puts its one-year stock price increase at over 170%.

Charter did have good results. Revenue was up 8% to over $1.4 billion. Operating income was up to $156 million from a small loss last year. But, interest expense on the company’s huge debt was $464 million, flat with last year.

Charter is doing fairly well with the new services it provides. VoIP subscriptions rose rose by 127,000 to 573,000.

Charter has also refinanced much of its debt, bring down the cost of debt service. But, the company still has over $19 billion in long-term debt.

This makes its potential for recovery going forward unstable.

Charter does not have the capital to fight the phone companies as the come to market with their own fiber-to-the-home TV, broadband and phone product bundles. Its larger sisters like Time Warner Cable and Comcast do.

There is an argument to be made the the transaction to take Cablevision (CVC) private proves that cable companies are valuable. But, the premium on that deal was only 11%.

Charter is still a very risky bet. Jim Cramer’s take.

Douglas A. McIntyre