Charter's Subscriber Bleed Puts Merger Stakes in Sharp Focus

Charter Communications' latest earnings report reveals a company bleeding internet and video subscribers, with revenue dipping nearly 1%. The shaky results cast a spotlight on the high stakes of its proposed merger with Cox Communications.

• A leaky bucket: The cable giant lost more than 100,000 internet customers and 70,000 video subscribers in its third quarter. While new TV packages that bundle streaming apps have slowed the video exodus compared to last year, the drop in core internet customers stings more. The only growth engine was mobile, which added nearly half a million lines.

• Official optimism: Despite the drain, CEO Chris Winfrey projected confidence in the company's official statement, saying Charter is "operating well in a competitive environment" and focused on "free cash flow growth for shareholder value creation."

• Bigger is better: The poor quarterly performance underscores the strategic necessity behind Charter’s proposed merger with Cox Communications. The deal is designed to give the combined company more leverage against the tech giants that have come to dominate the connectivity and content business.

Charter's mobile growth is a bright spot, but it isn't enough to offset the decay in its legacy businesses. The company is betting its future on the idea that getting bigger is the only way to survive. The entertainment industry is closely watching the continued decline of traditional pay-TV. Meanwhile, Wall Street is focused on how the weakening internet subscriber base impacts Charter's profits and long-term financial health.