TWC's Video Subs Attrition

Time Warner Cable Inc. (NYSE: TWC) lost another 169,000 video customers in the traditionally tough second quarter, but still managed to beat Wall Street's financial expectations.

The video sub losses were up from the 130,000 TW Cable lost in the year-ago quarter and more than the 145,000 video sub losses analysts were expecting. The result also contrasted sharply with MSO peer Comcast Corp. (Nasdaq: CMCSA, CMCSK), which has been shaving down video subscriber losses in recent quarters. TW Cable ended the second quarter with 12.29 million residential video customers. (See Comcast Q2 Profits Climb, Video Subs Fall .)

TW Cable, which recently bought Insight Communications, compensated with subscriber growth in other categories. It added 59,000 high-speed Internet customers, up from 54,000 a year ago, giving it a total of 10.77 million. The MSO signed on 45,000 new voice subs, versus 32,000 additions a year ago, extending that total to 4.99 million.

In a research note, Sanford C. Bernstein & Co. Inc. analyst Craig Moffett used an Olympics analogy to sum up TW Cable's disappointing video losses. "Think of it as a gymnast who nailed the routine but had a hop on the landing. All in all, the performance may have been good enough to stay in medal contention, but it is hard to shake the perception of an opportunity lost."

But the financials were less mixed. The nation's second-largest cable operator posted net income of US$452 million ($1.43 per share) on revenues of $5.40 billion, up 9.3 percent versus a year earlier. Analysts were expecting earnings of $1.39 per share on revenues of $5.39 billion.

Business service revenues reached $464 million in the quarter, marking a year-on-year increase of 28.5 percent, and putting TW Cable on pace to almost nudge past $3 billion in annual revenues in the category, considered a major growth engine for the entire cable industry.

— Jeff Baumgartner, Site Editor, Light Reading Cable