Charter Earnings: Discounting Can't Overcome the Disney Dispute, Muted Seasonality, and Competition

Charter’s third-quarter results were noisy and don’t provide much insight into the business’ performance. Management indicated that the dispute with Disney in September had only a small impact, but estimating customer losses or missed sales opportunities isn’t precise. More importantly, we won’t have concrete evidence of how customers will likely react to the expiration of Spectrum One promotional discounts until late this year or early next year. While we still don’t like Charter’s decision to offer big promotional discounts, we still like the firm’s long-term position to maintain share and generate cash flow. Our fair value estimate remains $580.