Charter 2002 Annual Report Download - page 29

Download and view the complete annual report

Please find page 29 of the 2002 Charter annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 130

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130

Revenues by service oÅering are as follows (dollars in millions):
Year Ended December 31,
2002 2001 2002 over 2001
% of % of %
Balance Revenues Balance Revenues Change Change
Analog video ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $3,083 68% $2,768 73% $315 11%
Digital video ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 457 10% 307 8% 150 49%
High-speed data ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 340 7% 155 4% 185 119%
Advertising sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 302 7% 197 5% 105 53%
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 384 8% 380 10% 4 1%
$4,566 100% $3,807 100% $759 20%
Analog video revenues consist primarily of revenues from basic and premium services. Analog video
revenues increased by $315 million, or 11%, to $3.1 billion in 2002 as compared to $2.8 billion in 2001.
Approximately $130 million of the increase was due to a full year of revenue from the AT&T Broadband
systems acquired in June 2001 with the remainder due to general price increases, oÅset somewhat by the
decline in analog video customers. We do not expect an increase in analog video customers; however, our goal
is to sustain revenues by reducing analog customer losses and to grow revenues through price increases on
certain services and packages as well as the sale of data services and digital video services.
Digital video revenues increased by $150 million, or 49%, to $457 million in 2002 as compared to
$307 million in 2001. All of our digital video customers also receive basic analog video service, and digital
video revenues consist of the portion of revenues from digital video customers in excess of the amount paid by
these customers for analog video service. The majority of the increase resulted from the addition of
approximately 538,000 digital customers. Approximately $31 million of the increase resulted from a full year
of revenue from digital video customers acquired in the acquisition of AT&T Broadband systems in June 2001.
While we expect the number of our digital customers to increase, we believe the growth rate for these services
will slow as compared to prior years.
High-speed data revenues increased $185 million, or 119%, from $155 million for the year ended
December 31, 2001 to $340 million for the year ended December 31, 2002. The majority of the increase or
$171 million was primarily due to the addition of 585,200 high-speed data customers. Between 2001 and 2002,
we were able to oÅer this service to more of our customers, as the estimated percentage of homes passed that
could receive high-speed data service increased from 66% to 82% as a result of our ongoing system upgrades.
Advertising sales revenues consist primarily of revenues from commercial advertising customers,
programmers and other vendors. Advertising sales increased $105 million, or 53%, from $197 million in 2001
to $302 million in 2002. The increase was primarily due to an increase of $53 million, from $13 million in 2001
to $66 million in 2002, related to an increase in advertising contracts with programmers, $40 million related to
increased advertising capacity as a result of an increased number of channels carried by our systems and
$14 million related to the acquisition of AT&T Broadband systems in June 2001. For the years ended
December 31, 2002 and 2001, we received $13 million and $14 million, respectively, in advertising revenue
from our two largest suppliers of digital set-top terminals representing 0.3% and 0.4% of total revenues,
respectively. We expect that advertising provided to vendors and programmers will decline substantially in the
future. Revenues from advertising provided to vendors and programmers are recognized based upon the fair
value of advertising. Vendor advertising purchases are made pursuant to written agreements that are generally
consistent with other third-party commercial advertising agreements and at prices that we believe approximate
fair value. In some cases we purchased equipment from the vendors at the same time.
Other revenues consist primarily of revenues from franchise fees, customer installations, equipment
rental, processing fees, wire maintenance fees, home shopping, dial-up Internet service, late payment fees and
other miscellaneous revenues. Other revenues increased $4 million, or 1%, from $380 million for the year
ended December 31, 2001 to $384 million for the year ended December 31, 2002. The increase was primarily
due to an increase in franchise fee revenue directly related to the increase in analog and digital video revenues
27