Despite losing more video subscribers, Time Warner Cable posted third-quarter profits that were better than analysts expected and also announced that its board approved a $4 billion buyback share program.
Time Warner Cable's third-quarter profit rose to $360 million, or $1 per share, from $268 million, or 76 cents per share, in the same quarter a year ago.
Time Warner Cable's revenue increased 5.2 percent to $4.73 billion in the third quarter that ended Sept. 30. According to a survey by Thomson Reuters, analysts had expected an average profit of 89 cents per share on revenue of $4.72 billion.
During the third quarter, Time Warner Cable CEO Glenn Britt said on a conference call this morning, the company's high-speed data service performed the best. Time Warner Cable, the nation's second-largest cable operator, added 104,000 residential and business data customers in the third quarter for a 6 percent year-over-year increase. Time Warner Cable has 9.7 million data subscribers, with 36 percent of the homes passed subscribing to a data service.
More of Time Warner Cable's data subscribers migrated to the company's faster speeds during the quarter, with 123,000 opting for its Turbo tier and 4,000 subscribing to a DOCSIS 3.0 offering. Currently, 13 percent of the company's residential customers subscribe to the Turbo or DOCSIS 3.0 tiers.
Time Warner Cable added 34,000 new digital voice subscribers during the quarter for a total of 4.4 million subscribers, which is a 7 percent increase over the same quarter a year ago. At the close of the quarter, 16.5 percent of the homes passed in Time Warner Cable's footprint were phone subscribers.
On the business-class side, Time Warner Cable added 12,000 new phone subscribers in the quarter to bring its total to 102,000 customers, which is a 75 percent increase over the same quarter a year ago.
Time Warner Cable lost 155,000 video subscribers in the third quarter, primarily due to the economy. Time Warner Cable chief financial officer Rob Marcus cited the competition, unemployment rates, housing vacancy rates and the lack of new homes being built as the reasons for the video losses.
The loss in video subscribers was primarily among single-play subscribers, some of whom signed on during last year's broadcast digital video transition.
As a result of the video subscriber losses, Time Warner Cable's primary service units (PSUs) declined by 17 percent in the quarter, although Marcus said PSUs increased month-to-month from July to September.
Marcus also said that so far in the current fourth quarter, Time Warner Cable has already added more voice customers than it did in all of the previous quarters.
"In summary, the company is doing well," Britt said. "We're introducing important new offerings that we think will give our customers control in ways that are simple and easy. We are performing well financially despite the economic and competitive climate, and our efforts are paying off in the generation of strong free cash. And all of this makes it possible for us to return a large amount of capital to our shareholders through regular dividends and the share repurchase program we announced this morning."
The buyback program is the first for Time Warner Cable since it spun off from Time Warner Inc. early last year.