Bulls on Charter Communications (CHTR) would argue that the company was almost out of business less than two years ago and that the shares deserve to have had a run. The other side of that case is that the company still has tremendous debt and that there is no guarantee that the company can handle it.
The one fact not in dispute is that the company’s shares are up 275% over the last year. That compares with 35% for Comcast (CMCSA) and almost 80% for Cablevision (CVC) which is being bought-out by its founding family.
Charter has two hurdles, neither of which it may be able to overcome. One is that many of its customers do not like it. In the latest American Customer Satisfaction Survey, Charter came in last among cable and satellite companies. That leads to another issue.
Cable companies may continue to do very well, if they can keep Verizon (VZ) and AT&T (T) and their fiber-to-the-home initiatives out of the consumers living room. Cable has a nature edge. It already has most of the current "triple play" consumers who subscribe to bundled TV, broadband, and voice services. The telcos need to pick-up customers to offset their landline losses. Of all the large cable firms, Charter has the least money to spend on improving its network and keeping customers.
All of that means that Charter’s stock will have a tougher time moving up.
Douglas A. McIntyre can be reached at [email protected]
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