Time Warner Cable Loses More TV Subs Than Expected, Touts Best Sub Trends in Years
The company says L.A. sub trends were strongest, thanks to SportsNet LA, and still expects to be acquired by Comcast in early 2015
Time Warner Cable on Thursday said it lost 184,000 residential pay TV subscribers in the third quarter, fewer than in the year-ago period but more than in the seasonally slow second quarter (152,000) and more than Wall Street had expected. Analysts had on average expected a loss of 136,000.
But the company said it had its best third-quarter overall customer relationship performance in six years, including strong broadband subscriber growth. Time Warner Cable added 108,000 broadband subscribers in the latest quarter, marking the firm's best third-quarter broadband performance in five years.
The company, whose $45 billion deal to be acquired by Comcast is being reviewed by regulators, ended the quarter with nearly 10.83 million residential video subscribers and nearly 11.51 million residential broadband customers.
TW Cable, led by CEO Rob Marcus, also said it continues to expect Comcast's acquisition of the firm to be completed in early 2015. The firm had $48 million in merger-related costs in the third quarter.
Its quarterly earnings fell short of analysts' expectations. The cable giant reported earnings of $499 million, compared with $532 million in the year-ago period, down 6 percent amid higher expenses. Revenue rose 4 percent to $5.71 billion.
Wells Fargo analyst Marci Ryvicker in a first reaction said the latest subscriber trends were "a touch soft" compared to her projections.
On what may have been the company's last earnings call, if Comcast gets approvals to acquire it by early 2015, Marcus said that October subscriber momentum "looks really good." He concluded: "The bottom line is subscriber trends are better."
Asked about the recent news from HBO and CBS about online-only video services, the Time Warner Cable CEO said: "We continue to believe that our video value proposition is a valuable one," adding: "We have got a very strong video offering, and we are not terribly concerned about others eating into that."
He was also asked about the company's L.A. sports network that is dedicated to the L.A. Dodgers baseball team, which contributed to higher expenses in the latest quarter. Marcus said L.A. had the best year-over-year video subscriber performance across TWC markets in the third quarter. He also said his team continues for future distribution deals with other pay TV operators. The network got "meaningful viewership during the season," and management's view of the value of the network is not in any way diminished, Marcus said.
Oct. 30, 6:55 a.m. Updated with conference call comments.