• by Paul Gough , November 3, 2003

Advertising revenues fell in the third quarter at Charter Communications, even as the nation's third-largest cable provider reported a hefty profit.

Charter's advertising revenue dropped to $64 million from $86 million during the same period last year, the only major revenue category to show declines in a year-to-year comparison. Video revenues - primarily subscriptions to Charter's analog and digital cable services - rose slightly to $866 million and high-speed data revenues rose sharply, to $145 million from $91 million in the third quarter of 2002.

The decline in the advertising revenues came from comparisons to two extraordinary events in the third quarter of 2002, the majority being campaigns running across Charter's portfolio announcing the launch of cable channels on the system. About 10 percent to 15 percent of the decline was due to political advertising revenues in the third quarter of 2002, primarily in September, that didn't happen this year. Jim Heneghan, senior vice president of Charter Advertising Sales, said excluding the so-called vendor advertising and the impact of politicals, advertising revenues rose about 8 percent in the third quarter.

Charter Communications has 6.5 million subscribers in 40 states, and a business that not only includes cable TV but also an increased focus on providing broadband to individuals and companies. Overall revenues rose 3 percent to $1.21 billion. Revenues were boosted by price increases in Charter's video and data offerings. Charter reported a $37 million profit in the third quarter, compared to a $166 million loss in the third quarter of 2002.

During a conference call Monday afternoon, Chief Executive Officer Carl Vogel said Charter was happy with the results of its marketing push. Charter hadn't done a large-scale marketing effort in recent quarters but realized that, with competition from direct-broadcast satellite and other cable providers, it needed to do so. While the third-quarter campaign's results weren't immediately available, Charter said the pace of new customer acquisitions was higher and retention was improved, at least slightly.

Charter has also started to focus its business, restructuring and selling off pieces of the cable system that the company doesn't think is in its long-term strategy. These include the $91 million sale of a cable system in Port Orchard, Wash., a transaction that closed Oct. 1, and the plans to deal several East Coast cable TV systems for $765 million sometime this year.

Vogel said that these deals might not be the last of Charter's divestitures.