Charter Communications expects higher than previously outlined cost savings from two big recent acquisitions, chairman and CEO Tom Rutledge said on the company's second-quarter earnings conference call on Tuesday. He didn't immediately detail the new targets.
The cable giant recently closed the $55 billion acquisition of Time Warner Cable and the $10.4 billion takeover of Bright House that made it the second-biggest U.S. cable company behind Comcast and the third-largest pay TV operator, behind AT&T/DirecTV and Comcast.
Charter previously predicted $800 million in TWC annualized programming and overhead elimination synergies by the end of year three after the deal closes, which doesn't include revenue and other operating benefits. Charter CFO Christopher Winfrey on Tuesday's earnings call also mentioned that the TWC figure will exceed initial expectations, again without detailing a new estimate.
He said though that by the end of the first year, annual deal savings will hit more than $600 million, compared with a previous estimate of $400 million-$500 million.
The company has said that $400 million of the $800 million TWC figure will come from lower programming costs as Charter cable systems start using the TWC rates. Lawsuits from programmers, namely Univision and Fox News, have followed though. Both legal actions pose the question of whether Charter can hold up the TWC agreements, which are more advantageous, as governing carriage on its cable systems.
Asked about the lawsuits, Rutledge said Tuesday that "the nature of programming relationships hasn't fundamentally changed, and [it] is still a contentious contractual environment," but added that Charter has generally "good relationships with our programmers." He also argued that "the litigation is part of the negotiation process in general." He said that overall, the reaction from network groups has been about as expected so far.
Rutledge on Tuesday also lauded Time Warner Cable as having come under Charter's ownership in stronger shape and said Charter was pleased with how the management teams at TWC and Bright House led the transition before the deal close. He also said the two companies are "in better shape" than the legacy Charter operations were four years ago when he took over management.
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