Charter Communications (CHTR) Q3 2026 earnings review
Charter closes Cox buyout, but broadband customer losses widen
Charter closed its buyout of rival cable operator Cox Communications, but broadband subscriber losses deepened across both networks. Including Cox in both periods, third-quarter revenue slipped 1.5% to $16.5 billion and profit excluding one-offs fell 3%, while a $6.3 billion write-down of local franchise rights pushed the company into a net loss. To counter the drop, chief executive Chris Winfrey launched a reorganization targeting $2 billion in annual cost cuts over 18 months.
| Combined revenue (including Cox in both periods) | $16.5B -1.5% from a year ago |
|---|---|
| Combined profit (Adjusted EBITDA, ex-integration) | $6.7B -3.0% from a year ago |
| Combined Internet customer additions | -233,000 -171,000 a year ago |
| Full-year combined capital spending plan | ~$13.0B updated from $11.4B standalone plan |
⚖️ Verdict: 🔴 Bearish
The story got worse because the core Internet business shrank faster than a year ago and forced a multi-billion-dollar balance sheet write-down. On the positive side, Charter completed a $5.5 billion debt swap that cut its debt balance by $1.5 billion, keeping leverage right on its plan of just under 4 times annual profit.
The question now is whether the $2 billion cost-cutting plan and $1 billion of Cox deal synergies can stop profit from falling while broadband customers leave. Either the expense cuts and mobile bundles stabilize cash flow over the next year, or wireless and fiber rivals force Charter to give back the savings in lower Internet prices. Fourth-quarter Internet subscriber numbers and operating costs will provide the first test.
🐂 Bull Case
Cox Deal and Debt Swaps Hit Leverage Plan
Charter closed its acquisition of rival cable operator Cox Communications on August 19, adding over 5 million customer relationships and 11 million homes and businesses passed by its network. Management had promised to keep net debt near 3.9 times annual profit after the deal by swapping existing debt at a discount.
During the quarter, the cable group exchanged $5.5 billion of senior notes for cash and new notes, cutting its debt balance by about $1.5 billion, and repaid $1.0 billion of maturing Cox notes. By our math, principal debt of $108.6 billion minus $573 million of cash sits at 3.96 times combined 12-month Adjusted EBITDA, a profit measure that excludes interest, taxes, depreciation and one-offs.
Hitting the debt target matters because the company took on Cox's debt while its own profit is shrinking. Keeping the balance sheet on plan gives chief executive Chris Winfrey room to integrate Cox, which is expected to bring over $1 billion in cost synergies.
What to watch: fourth-quarter share repurchases and debt reduction. Management previously said it would restart buybacks in the fourth quarter after pausing them to fund the Cox closing, which will show how much cash is left after debt service.
Mobile Additions and Video Retention Improved
Charter uses mobile phone plans and bundled streaming apps to keep households on its cable network. On September 16, the company launched its Spectrum pricing across the Cox footprint, offering a year of free mobile service and up to $132 per month of streaming apps like Disney+ and HBO Max inside its TV packages.
Across the combined business, Spectrum Mobile added 508,000 lines in the third quarter to reach 13.5 million total lines, while legacy Charter added 440,000 lines, up from 406,000 in the second quarter. Combined video losses narrowed to 77,000 customers from 121,000 a year ago, and legacy Charter activated 116,000 subsidized rural passings, adding 48,000 rural customer relationships.
Thecompany said it has seen "an improvement in customer trends across the legacy Cox footprint" since introducing the new bundles. Faster mobile growth and smaller TV losses show that customers want the combined packages, even if those bundles have not yet stopped overall broadband cancellations.
What to watch: fourth-quarter mobile net additions in the legacy Cox markets. It will show whether introducing Spectrum's wireless bundles can lift Cox's customer retention in its first full quarter.
🐻 Bear Case
Internet Customer Losses Keep Widening
"We will return Charter to Internet customer growth and transform Charter into a simpler, faster, more agile organization," chief executive Chris Winfrey said. Home broadband is the foundation of the business, generating $7.1 billion of the combined company's $16.5 billion in quarterly revenue.
The numbers moved the other way in the third quarter. Including Cox in both periods, Charter lost 233,000 Internet customers, worse than the 171,000 it lost in the same quarter last year. Legacy Charter lost 156,000 Internet subscribers compared to 109,000 a year ago, while legacy Cox lost 77,000.
- Combined customer relationships: down 2.6% from a year ago to 36.7 million
- Share of homes passed that buy service: 51.9%, down 2.6 percentage points from a year ago
- Combined Internet revenue: down 3.7% from a year ago to $7.1 billion
Although the third quarter improved slightly from the second quarter's 275,000 combined broadband loss, the comparison against last year got worse. Because Charter is expanding its network into rural areas while losing subscribers overall, it is filling a smaller share of its network each quarter.
What to watch: separate legacy Charter and legacy Cox Internet net additions in the fourth quarter. A wider loss against last year's fourth quarter would show that wireless and fiber competitors are still taking share despite the new operating model.
Mobile Growth Cannot Offset Lower Cable Revenue
Charter is trading high-margin broadband and traditional TV revenue for lower-margin mobile lines and discounted bundles. Including Cox in both periods, total revenue fell 1.5% from a year ago to $16.5 billion, while Adjusted EBITDA fell 4.0% to $6.6 billion, or 3.0% excluding $76 million of Cox integration costs.
Combined Adjusted EBITDA margin shrank by 1.0 percentage point to 39.9%. Other costs of revenue, which include the cost of mobile phones sold to customers and payments to wireless network partners, rose by 2.0 percentage points of revenue to 13.7%. Programming costs fell by 1.4 percentage points of revenue, partly because Charter netted $286 million of streaming app costs directly against video revenue, up from $106 million a year ago.
Mobile service revenue grew 17.3% to $1.2 billion, but that $171 million gain could not cover the $269 million drop in Internet revenue and $394 million drop in video revenue. Monthly residential revenue per customer fell 1.6% to $117.85, showing that promotional bundles are weighing on customer bills.
What to watch: fourth-quarter combined Adjusted EBITDA excluding integration costs. It will test whether political advertising and early cost cuts can stop the profit decline before the new $2 billion savings plan takes effect.
$6.3 Billion Franchise Write-Down Hits Profit
Charter carries tens of billions of dollars of cable franchise rights on its balance sheet, representing the value of its local operating agreements. In the second-quarter filing, management warned that it might have to test those assets for a write-down because itslast assessment showed little cushion above book value.
In the third quarter, the company recorded a $6.3 billion non-cash franchise impairment charge. Even after adding Cox's cable systems, total franchise assets on the balance sheet rose by only $444 million from December to $67.9 billion. The write-down pushed Charter to a $2.4 billion net loss attributable to shareholders, or $20.50 per diluted share, despite a $1.4 billion gain from extinguishing debt at a discount.
While the charge does not use cash, it confirms that shrinking broadband subscriber counts have permanently reduced the accounting value of Charter's cable footprint.
What to watch: the footnote on franchise impairment in the third-quarter 10-Q filing. It will disclose whether the $6.3 billion write-down came from legacy Charter markets or the Cox transaction, and how much cushion remains on the rest of the balance sheet.
👓 Other Themes
Charter Targets $2 Billion in Expense Savings
Alongside the Cox closing, chief executive Chris Winfrey announced a new operating model targeting $2 billion in annualized operating expense savings over the next 18 months, on top of over $1 billion in planned Cox synergies. The programme focuses on "eliminating nonessential activities, simplifying organizational structures and driving greater efficiencies through vendor partnerships" while returning legacy Cox customer service jobs to the US.
💲 Other KPIs
Free cash flow — operating cash flow minus capital spending and related working capital — fell 58.4% from $1.62 billion a year ago. Operating cash flow dropped 10.1% to $4.03 billion due to the timing of cash tax payments and one-time Cox deal costs, while capital spending accruals swung from a $192 million cash benefit to a $326 million outflow.
Combined advertising revenue jumped 21.0% from $403 million a year ago, lifting actual advertising sales 29.2% to $460 million. Midterm election political ads drove the increase; excluding political advertising in both periods, combined advertising sales fell 5.2% as traditional TV ad declines outweighed streaming ad growth.
Charter bought back 139,807 Class A shares for $19 million during the quarter, down from $838 million in the second quarter and $963 million in the first. Management had previously stated it would pause open-market buybacks through the end of the third quarter to conserve cash for the Cox closing.
🔮 Guidance
Raised to include Cox. The company now expects combined full-year capital spending, excluding $70 million of year-to-date integration capital, to total about $13.0 billion, replacing its prior $11.4 billion standalone plan. Through nine months, combined capital spending excluding integration costs was $9.85 billion. By our math, that leaves about $3.15 billion for the fourth quarter, compared to $3.24 billion spent in the third quarter.
❓ Key Questions
What are the upfront costs of the $2B savings plan?
Charter targeted $2 billion in annualized operating expense savings over 18 months while returning Cox customer service to the US. Management did not disclose the restructuring charges required to achieve these cuts or how much will hit 2027 profit.
Did the $6.3B write-down hit Charter or Cox franchises?
The release booked a $6.3 billion franchise impairment charge without breaking down the source. Investors need to know whether legacy Charter cable systems failed their valuation test and how much headroom remains on the remaining $67.9 billion balance.
What is the combined full-year profit outlook after the cuts?
Last quarter management forecast standalone Adjusted EBITDA to fall about 1% in 2026. With combined Adjusted EBITDA down 3.0% excluding integration costs in the third quarter, the company gave no updated full-year profit outlook in the release.
How much did Cox synergies help third-quarter profit?
Management previously committed to providing estimates of realized synergies in its first report after closing the Cox deal. The release reiterated the $1 billion-plus target but did not state how much was captured in the third quarter.