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News summary for 11/07/07

Wed, 11/07/2007 - 8:30am
CED staff

Time Warner Cable’s 3Q profits slip
By Mike Robuck

Time Warner Cable’s third-quarter profit dipped as the company lost more subscribers than some analysts anticipated.

Time Warner Cable, the second largest cable operator in the country behind Comcast, said its net income fell to $248 million, or 25 cents per share, from $1.2 billion, or $1.20 a share, from the same time frame last year.

The acquisition of former Adelphia systems, along with a trading of assets with Comcast, helped revenue increase to $4 billion from $3.21 billion last year while subscription revenue also increased 25 percent.

But those same Adelphia systems, particularly those in the Los Angeles and Dallas markets, contributed to a net loss of 83,000 basic video subscribers during the third quarter.

“Time Warner Cable seems to be suffering from the same disease as Comcast - shrinking basic video subscribers in the face of creative bundles from telco and lots of HD from satellite TV providers,” said Patti Reali, an analyst with Gartner. “Maturity in their high-speed data operations also means slower growth rates going forward.”

Time Warner Cable added 128,000 digital video subscribers in the third quarter and 224,000 high-speed Internet subscribers. On the voice side, the company added 275,000 subscribers.

“The continuing positive for cable is the growth led by cable VoIP service uptake and good subscriber numbers for digital TV with HD/DVR features,” Reali said. “Verizon’s FiOS has the advantage of being the new ‘new’ thing in the market, and the ability of telcos to provide creative bundles with TV, broadband and the wireless/mobile component looks like it’s starting to hurt cable - especially at a time when the news about the Sprint-cableco JV might jeopardize cable’s own ability to compete in the wireless segment.”

Time Warner Cable president and CEO Glenn Britt said in a prepared statement that the company will have new offerings for residential digital phone customers and new tiers in the broadband Road Runner service.

Britt said the company is also “laying the groundwork for future interactive advertising opportunities” and customers can expect additional eTV features such as Time Warner Cable’s Start Over and Look Back time-shifting services.

DirecTV U.S. adds subs, increases revenues in Q3 2007
By Traci Patterson

In Q3, The DirecTV Group Inc. added 240,000 net U.S. subscribers, an increase of 45 percent year-over-year, bringing the total number of U.S. subscribers to 16.6 million - an increase of 6 percent compared with the year-ago quarter.

In the quarter, DirecTV’s U.S. revenues increased 14 percent, to $3.9 billion, due to strong ARPU growth and the larger subscriber base, the company said.

Gross subscriber additions in the U.S. increased to 1.03 million, and average monthly churn declined to 1.6 percent, primarily due to increased sales of HD and DVR services, as well as increased demand through the direct sales channel. More than 50 percent of new subscribers in the quarter signed up for HD and/or DVR services, compared with only 28 percent a year ago.

The DirecTV Group’s net subscriber additions nearly doubled - to 401,000. Average monthly revenue per subscriber (ARPU) grew 8.3 percent, to $78.8 million.

The DirecTV Group’s revenues increased 18 percent, to more than $4.3 billion, but the group’s operating profit declined 10 percent, to $566 million, and net income fell 14 percent, to $319 million, compared with Q3 2006. DirecTV Latin America revenues increased 67 percent, to $442 million.

“Similar to our third quarter results, we're expecting continued strong operating performance in the coming quarters as we continue to enhance the nation's already-best HD service,” said Chase Carey, The DirecTV Group’s president and CEO. “We currently offer 74 national HD channels - more than any cable TV provider in the U.S. - and we remain on schedule to offer up to 100 channels around the end of the year.”

AOL acquires fourth ad-related company in 2007: Quigo
By Traci Patterson

AOL is set to acquire Quigo, a site- and content-targeted online advertising company, which will allow AOL to offer contextual advertising that pairs ads with relevant Web page content.

Quigo's AdSonar technology enables advertisers to purchase ads on sites based on specific pages, sections, topics or keywords. The company offers a variety of advertising and pricing options, including text, display and video ads bought on a cost-per-click, cost-per-impression and cost-per-time basis.

FeedPoint, Quigo’s search engine marketing business, allows local and retail advertisers to manage their marketing relationships with the search engine and comparison shopping platforms.

The seven-year-old company has more than 500 publisher relationships, including a recently finalized deal with Time Inc., and a network of about 3,000 advertisers.

Quigo is the fourth advertising company that AOL has acquired this year. Other acquisitions include Third Screen Media, a mobile ad player; ad:tech, an ad-serving platform; and Tacoda, a behavioral targeting company. Also, in September, AOL formed Platform-A, a digital display ad platform that reaches more than 91 percent of the online audience, the company said.

“With Quigo, we are putting the final pieces of Platform-A in place,” said Randy Falco, chairman and CEO of AOL. “We will be able to offer advertisers and publishers the most advanced set of tools, including contextual and behavioral targeting, superior analytics, and access to the largest display network in the marketplace.”
 
Financial terms of the deal were not disclosed. Quigo will operate as a wholly-owned subsidiary of AOL within the Platform-A organization, AOL said.

HDTV rolling off shelves; Some consumers still confused
By Mike Robuck

New research by the Leichtman Research Group (LRG) found that roughly one-quarter of households in the country have at least one TV set that is able to receive HDTV programming, which is double the penetration rate of two years ago, but consumers are still confused about what HD really is.

LRG’s research found that while more than three-quarters of the HDTV owners think they’re watching HD programming, about 53 percent are actually getting HD signals from a cable, telco or satellite service provider. LRG said about 4 percent of the above 53 percent are watching HD programming via-broadcast only, which leaves about 20 percent of those with HDTVs erroneously thinking they’re watching HD when they’re actually not.

Only 41 percent of the HDTV owners said that they were told how to receive HD programming when they bought their HDTVs.

“The number of households with an HDTV has significantly increased in recent years, and LRG forecasts that over 85 million U.S. households will have at least one HDTV by the end of 2012,” said Bruce Leichtman, president and principal analyst for Leichtman Research Group, in a statement. “However, with the expansion of HDTV, there will need to be continued consumer education about high definition programming and products.”

LRG’s research also found that 17 percent of all households plan to purchase a new TV set in the next 12 months, and 47 percent of this group expects to spend more than $1,000 on a TV set.

SureWest’s 3Q earnings dip 66 percent
By Mike Robuck

Roseville, Calif.-based SureWest Communications reported today that its third-quarter earnings were down 66 percent compared to the same year-ago period.

SureWest, a telecommunications company that serves northern California, said its third-quarter earnings dropped to $736,000, or 5 cents a share, from $2.2 million, or 15 cents a share, from the third quarter last year. SureWest said the decline in earnings was partially due to its discontinued directory operations. Last year the directory operations added $1.3 million in income to the third quarter.

SureWest’s revenue went from $52.6 million last year to $51.6 million this year for a 2 percent drop. The company’s residential access lines dropped by 7 percent while telecom revenue fell 10 percent.

SureWest’s wireless revenue was off by 5 percent. The good news for SureWest was the 15 percent revenue growth in its broadband division, which was aided by the company’s fiber build-out.

"For the past several years we have been upgrading and expanding the network as well as diversifying the revenue streams across our high-speed platform," said Steve Oldham, SureWest's president and chief executive officer, in a statement. "This successful transformation from a traditional provider of voice products into a leading edge provider of a broad array of services is evident in the third quarter results, with 15 percent broadband revenue growth and 16 percent Broadband business access line growth helping to offset anticipated access line declines in the telephone businesses."

Acme Packet revenue up 33 percent; Profit dips
By Brian Santo

Session border control (SBC) specialist Acme Packet reported its third quarter revenue was up by a third from last year to $29.6 million, though net income was down to $5.5 million from $6.8 million reported in the third quarter of 2006.

Andy Ory, president and chief executive officer of Acme Packet, said, “We were able to further expand our customer base in our core service provider market and issue our first public announcements of customers in the large enterprise and contact center markets.  Looking ahead, we’re excited by the growth opportunity for our session border controllers in our core market as well as our prospects for growth in large enterprises and contact centers.”

The announced customers included Echopass, and the La Quinta and Extended Stay hotels, which have outsourced their managed network services for voice communications to Thing5 LLC. Acme Packet also announced its Net-Net SBCs have been selected by Broadview Networks and deployed by Bandwidth.com.

Acme Packet also formed a partnership with Camiant a provider of policy control solutions, to help deliver commercial SIP-based VoIP services for cable operators.

Separately, Acme Packet announced that Telecom Italia Sparkle (TI Sparkle), a wholly-owned subsidiary of Telecom Italia, has deployed Acme Packet Net-Net SBCs at its network’s core borders in major cities in Italy, Germany and the U.S.

Broadband Briefs for 11/07/07

* Cablevision adds CNN HD to lineup
By Brian Santo

Cablevision Systems will begin transmitting CNN HD to its subscribers. Cablevision said CNN HD is its 42nd HD channel in its lineup of HD programming.

“We are pleased to add CNN HD to our high-definition line-up, which has nearly doubled in size over the last year," said John Trierweiler, Cablevision's senior vice president of product management. "More and better HD programming, without the extra fees our competitors charge customers to see HD, is a defining element of our iO TV digital cable service, and our robust fiber optic network allows Cablevision to offer this expanding array of high-definition programming to our more than 800,000 HD customers.”

* Former Nortel exec named Camiant’s CEO 
By Traci Patterson

Camiant has named telecom vet Steve Slattery as president and CEO of the company.

Slattery, who most recently led Nortel Networks' Enterprise Solutions business unit, will continue Camiant's momentum in the policy server market, the company said.

Camiant is increasing its focus on next-gen broadband IP networks and emerging wireless platforms that demand increased performance in the delivery of multimedia content and applications.

“Steve's appointment underscores Camiant's commitment to serving top-tier customers around the world, and accelerating the growth of the company as multimedia applications and mobile convergence plays a critical role across market segments,” said Ed Anderson, managing partner of North Bridge Venture Partners and a member of Camiant’s board of directors. “His prominence in the field of mobility, and his demonstrated ability to translate technology innovation into large-scale business, dovetails perfectly with Camiant's rising profile in the broadband sector.”

Previously, Slattery served as president of Nortel's Carrier Packet Networks organization, which encompassed the company's Ethernet, optical, and wireline voice and data portfolios. He is also recognized for establishing Nortel as a vendor for Verizon WirelessSprint and other mobile operators for the rollout of their respective 3G infrastructures.

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