Charter Communications: revenue rose 9.1% on the Cox deal, but a $6.3bn franchise impairment turned profit into a loss

On 6 November Charter Communications reported third-quarter 2026 results. Revenue came in at $14,922m, up 9.1% year on year, but reported-basis EBITDA fell to a loss of $905m and the net loss reached $2,397m, driven by a one-off $6,326m franchise impairment. Excluding it, adjusted EBITDA was $5,943m, up 6.9%, while net debt of $107,659m equals 7.47x trailing-twelve-month EBITDA. Our conclusion: the share is rather unattractive – the portal model puts upside to fair value at minus 52%. Our view: the share is rather unattractive at the current price; upside on the portal model -52%.

Our view: is there upside

Our view in numbers

Key takeaways

— Revenue rose 9.1% only because of the Cox acquisition, while on a comparable basis it fell 1.5%

— The $2,397m loss was created by a one-off $6,326m franchise impairment, not by operations

— Adjusted EBITDA rose 6.9%, but on a comparable basis it fell 4.0%

— Free cash flow shrank to $674m – almost half the year-earlier level

— Net debt of $107,659m equals 7.47x trailing-twelve-month EBITDA

— The EV/EBITDA multiple of 8.1 is 27% above its own three-year average of 6.4

— The $2bn cost-savings programme is the main case for a profit recovery, but the effect is delayed

Key figures, USD bn

Revenue rose 9.1% only because of the Cox acquisition, while on a comparable basis it fell 1.5%

Actual third-quarter revenue was $14,922m, up 9.1% year on year. The entire increase came from consolidating Cox Communications from 20 August 2026: without it, comparable revenue fell 1.5%, to $16,505m. That distinction matters – Charter's organic business is still shrinking.

On a comparable basis, internet revenue fell 3.7% to $7,097m on a 2.7% decline in internet customers and a 1.6% drop in monthly revenue per residential customer to $117.85. Video revenue fell 9.8% to $3,609m, including $286m of programmer streaming-app costs netted within video revenue. Mobile service (up 17.3%) and advertising (up 21.0% on political spending) provided support.

The quarterly acceleration in revenue growth from minus 1.7% in Q2 to plus 9.1% in Q3 is an acquisition effect, not an organic improvement. On a comparable basis the trend is still negative, and that is what will determine whether the company can return to growth after integration.

The $2,397m loss was created by a one-off $6,326m franchise impairment, not by operations

Net loss attributable to Charter shareholders in the third quarter was $2,397m against a profit of $1,137m a year earlier. The gap is almost entirely explained by a $6,326m franchise impairment, which the company names as the main cause of the loss. Without it, profit would have been positive.

Part of the impairment was offset by a one-off $1,391m gain on debt extinguishment from bond exchanges. Income tax and the non-controlling interest also fell. On a comparable basis the loss was $2,079m against a profit of $952m a year earlier – the impairment determined the result there too.

Loss per share was $20.50 against income of $8.50 a year earlier. For valuing the business, what matters more is that the impairment is non-cash: operating cash flow stayed positive at $4,027m. But it signals that the carrying value of acquired assets came in below expectations.

Adjusted EBITDA rose 6.9%, but on a comparable basis it fell 4.0%

Adjusted EBITDA on an actual basis was $5,943m, up 6.9% year on year, driven by the Cox acquisition. On a comparable basis it was $6,587m, down 4.0%, and down 3.0% excluding integration costs. That shows organic profitability is deteriorating.

The adjusted EBITDA margin on a comparable basis fell to 39.9% from 40.9% a year earlier. Higher mobile device costs, mobile direct costs and advertising costs weighed, partly offset by savings in marketing and customer operations.

On a reported basis, EBITDA (operating profit plus depreciation and amortisation) was minus $905m against plus $5,291m a year earlier – the gap is entirely explained by the franchise impairment, which sits in operating profit. The company's adjusted EBITDA excludes it.

Free cash flow shrank to $674m – almost half the year-earlier level

Operating cash flow in the third quarter was $4,027m against $4,480m a year earlier. The company attributes the decline to the timing of cash tax payments and one-off cash costs related to the Cox deal. Capital expenditure was $3,027m, barely changed year on year.

Free cash flow fell to $674m from $1,621m a year earlier. Besides operating cash flow, an unfavourable change in accrued capex expenses weighed – $326m against plus $192m a year earlier. That means far less cash is left after investment.

On a comparable basis, capex fell to $3,235m from $3,642m, and the company expects about $13.0bn for full-year 2026 excluding transition capex. Lower investment supports future cash flow, but for now free cash covers only a small part of the debt burden.

Net debt of $107,659m equals 7.47x trailing-twelve-month EBITDA

Net debt at 30 September 2026 was $107,659m, equal to 7.47x trailing-twelve-month EBITDA. That is a high level for a company with declining organic revenue. In the quarter Charter exchanged $5.5bn of notes for about $4.0bn in cash and new notes, cutting debt by about $1.5bn, and repaid $1.0bn of Cox notes at maturity.

Interest expense over the last twelve months was $5,143m. Against EBITDA of $14,417m over the same period, interest consumes more than a third of operating profit. The bond exchanges and partial repayment slightly reduce the future burden, but the overall level remains high.

A debt-to-EBITDA ratio of 7.47 is a level, not a direction: the facts contain no prior-period comparison. For a company spending about $13bn a year on capex, such debt limits flexibility and raises sensitivity to rates.

The EV/EBITDA multiple of 8.1 is 27% above its own three-year average of 6.4

Trailing-twelve-month EV/EBITDA is 8.1 against its own three-year average of 6.4, i.e. 27% above. On this multiple the share is more expensive than its three-year average. Trailing P/E is 11.0, but profit for the period includes one-off impairments, so the measure is distorted.

Market capitalisation is $15,348m against net debt of $107,659m – debt is almost seven times equity. That explains why EV/EBITDA is the key multiple: enterprise value is driven mainly by debt, not equity.

On the portal's model, upside to fair value is minus 52%. The model is built on EBITDA growth times a target multiple, and with declining organic EBITDA it produces a negative result. This is our own calculation, not a market consensus.

The $2bn cost-savings programme is the main case for a profit recovery, but the effect is delayed

Charter announced a new operating model and a $2bn annualised cost-savings programme over 18 months, on top of more than $1bn of Cox deal synergies. The programme involves exiting non-core activities, simplifying structures and improving procurement efficiency. It is the main case for a profit recovery.

The effect, however, is delayed: 18 months takes us to mid-2028, while integration costs already run at $76m a quarter. On a comparable basis adjusted EBITDA is falling 4.0%, and savings must first stop that decline and then reverse it.

The company also launched Spectrum in Cox territory from 16 September and reports strong demand and improving customer trends. That supports hope for a customer-base recovery, but comparable internet customers still fell by 233,000 in the quarter. Savings and customer growth are the two conditions for profit to start recovering.

Valuation on the latest reported figures

Bottom line

The quarter's strengths were actual revenue of $14,922m and adjusted EBITDA of $5,943m, but both grew only because of the Cox acquisition. Organically revenue fell 1.5% and adjusted EBITDA fell 4.0%, and free cash flow dropped to $674m. The $2,397m loss was created by a one-off $6,326m franchise impairment, not by operations, but it signals a revaluation of acquired assets. The key question for a holder is whether the $2bn savings programme can reverse the profit decline before debt at 7.47x EBITDA becomes too heavy. Our conclusion: the share is rather unattractive – the portal model puts upside to fair value at minus 52%. Our view: the share is rather unattractive at the current price; upside on the portal model -52%.