TWC Broadband Subs Soar, Video Slumps
Even as Time Warner Cable achieves record broadband gains, it's still shedding video customers by the bucket despite all efforts to stem those losses.
Time Warner Cable Inc. (NYSE: TWC) posted strong increases in high-speed data subscribers in its third-quarter earnings report Thursday, racking up 108,000 new broadband customers, 92,000 of them on the residential side, as it carried out big speed hikes in three of its largest markets (New York, Los Angeles and Austin). That represented its best third-quarter broadband showing in five years, boosting its residential data customer total to slightly more than 11.5 million. (See TWC Speeds Along With Speed Hikes.)
Yet TW Cable continued to lose yet more video subscribers in the third quarter even as it scrambles to stop the bleeding by belatedly rolling out all-digital conversions across the US. The nation's second-largest MSO coughed up another 184,000 video customers in the summer quarter, reducing its overall video sub count to just over 10.8 million.
While the latest loss represent a big improvement over TWC's loss of 306,000 video subscribers in the year-ago period, the two quarters are not strictly comparable. That's because those prior losses occurred during the MSO's nasty month-long retransmission-consent fight with CBS Corp. (NYSE: CBS), when both CBS and Showtime were blacked out for TWC subs.
Further, this year's third-quarter video sub losses were actually heavier for TWC than its losses in the second quarter, when it shed 152,000 video customers. Plus, the company continues to lose both double-play and triple-play subs as its broadband-only base swells. As a result, TWC closed out September with nearly 700,000 more data subs than video subs, by far the biggest gap in cableland.
As it desperately scrambles to catch up with Comcast Corp. (Nasdaq: CMCSA, CMCSK), Cox Communications Inc. , Charter Communications Inc. , Cablevision Systems Corp. (NYSE: CVC) and other large US MSOs, TW Cable is aggressively upgrading its cable systems to all-digital transmission. In its earnings report, the company said it has now completed its all-digital upgrades in New York and Los Angeles, the nation's two biggest markets. (See TWC: Maxxing Out Too Late?)
But those "TWC Maxx" program upgrades don't seem to be making much of an impact on TWC's bottom line just yet. Despite the upgrades and the company's latest round of rate increases, its video revenues actually fell in the third quarter on a year-over-year basis, primarily because of the continuing decline in its video customer base. Residential video revenues slipped to just under $2.5 billion for the quarter, down 4% from $2.6 billion in the year-ago period.
Overall, TW Cable reported that its revenues rose for the quarter, climbing 3.6% to $5.71 billion, largely on the strength of its broadband performance and another stellar quarter for business services. But the company fell short of Wall Street's consensus revenue forecast of $5.74 billion, mainly because of its ongoing video struggles.
— Alan Breznick, Cable/Video Practice Leader, Light Reading