CBS dustup puts black eye on TWC’s Q3
The month-long blackout of CBS programming put a damper on Time Warner Cable’s third quarter results, which included the loss of 306,000 residential TV subscribers in the quarter.
While the amount of video subscribers lost in the third quarter exceeded analysts’ expectations of 183,000, Time Warner Cable also bled 24,000 data subscribers and 128,000 voice customers on the residential side. The loss of data subscribes was a sore spot for Time Warner Cable as its executives have stated that broadband and business-to-business services represented the future for the company. Analysts were expecting Time Warner Cable to add 46,100 data subscribers in the quarter.
Time Warner Cable’s management acknowledged that this summer’s blackout of CBS programming in Los Angeles, Dallas, New York and other areas, which totaled about 3 million subscribers, had a negative impact on the company’s third-quarter results.
Aside of CBS, chief operating officer and president Rob Marcus acknowledged that competition from AT&T and Verizon was also a factor. In its recent third quarter results, AT&T reported that its U-verse service had gained 265,000 new TV subscribers.
Marcus said that Time Warner Cable’s footprint was now overlapped about 27 percent by AT&T and 13 percent by Verizon for roughly one million more homes to contend for than last year.
“That naturally translates into more competition,” Marcus said. “That’s something we’ve been experiencing over quite a few quarters now. It definitely has an impact. We highlighted the programming disputes because it was kind of an unique element in the quarter, but many of the same factors that we’ve been grappling with over the last several quarters continued to persist in the third quarter as well.”
In order to compete with DSL providers in particular, Time Warner Cable will start offering its new $15 per month Lite tier across its footprint starting next month. Time Warner Cable will double the downstream of speed of the current Lite tier to 2 Mbps on the downstream when it re-launches.
Time Warner Cable’s third-quarter net income dropped 34 percent year-over-year. For the quarter ended Sept. 30, Time Warner earned $532 million, or $1.84 per share, down from $808 million, or $2.60 per share, in the same quarter of 2012.
Excluding one-time items, Time Warner Cable posted an adjusted profit of $1.69 per share, up from an adjusted $1.41 per share, which beat the average prediction of analysts surveyed by FactSet of $1.66 per share.
Helped in part by its business services, Time Warner Cable’s revenue increased 3 percent to $5.52 billion from $5.36 billion. Analysts projected $5.54 billion. Time Warner Cable added 14,000 business service customers in the third quarter.
Time Warner Cable also revised its revenue forecast for the year by projecting that full-year revenue will grow 3 percent to 3.5 percent, which was down from the previous range of 4 percent to 5 percent.