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Time Warner Cable’s 3Q profits slip

Wed, 11/07/2007 - 8:07am
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.

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