Sub, advertising growth drive Time Warner Cable’s Q1 profits
Driven by the additions of Internet, phone and digital video customers, as well as advertising revenue, Time Warner Cable’s first-quarter earnings increased by almost 30 percent.
Time Warner Cable, the nation’s second-largest cable operator, added 212,000 residential Internet subscribers and 86,000 new phone customers in the first quarter. On the video side, the company lost 42,000 basic video subscribers, but 102,000 signed up for digital video services.
On the advertising front, Time Warner Cable’s $173 million in revenue was a 19 percent increase over the same quarter a year ago. Subscription revenues grew to 5 percent year-over-year to $4.4 billion, driven by a 4 percent increase in residential subscription revenues and a 19 percent increase in commercial subscription revenues.
Time Warner Cable said the growth in residential video revenues was the result of video price increases, the continued growth of digital video subscribers and an increase in DVR service revenues, partially offset by a year-over-year decline in video subscribers.
Residential high-speed data revenues increased as a result of growth in high-speed data subscribers and, to a lesser extent, price increases. The growth in residential voice revenues was driven by an increase in digital phone subscribers.
Commercial subscription revenue growth was due primarily to increases in business-class phone and commercial high-speed data subscribers and an increase in cell tower backhaul and metro Ethernet revenues. Time Warner Cable said its advertising revenue growth was driven by year-over-year increases in a wide range of categories, most significantly automotive.
In many respects, Time Warner Cable’s positive first-quarter results mirrored Comcast’s results from yesterday.
Time Warner Cable’s first-quarter net income rose to $214 million, or 60 cents per share, compared with $164 million, or 48 cents per share, a year ago. The company’s revenue rose 5.4 percent to $4.6 billion from $4.36 billion. Analysts surveyed by Thomson Reuters had projected revenue of $4.56 billion and earnings of 74 cents per share.
Time Warner Cable’s free cash flow increased 78 percent to $652 million due to lowered capital spending.
“We’re off to a great start in 2010,” Time Warner Cable CEO Glenn Britt said. “Through product enhancements, more effective marketing and cost management, we drove profitable first-quarter growth even in the face of more intense competition.
“We also paid our first regular dividend and reduced our leverage to our target on the timetable we promised more than a year ago. Our accomplishments in the first quarter demonstrate our commitment to providing innovative and increasingly valuable services to our customers, generating free cash flow and making smart capital allocation.”
Time Warner Cable said it was on track to meet or exceed its full-year outlook, which includes earnings of $3.25 to $3.50 per share.