TW Cable sees rise in subscriber debt
EmptyNEW YORK -- Time Warner Cable Inc. chief executive Glenn Britt said Tuesday that the cable television operator is seeing a small increase in bad debt from subscribers in subprime housing areas.
Britt told investors at the Goldman Sachs Communacopia conference that there had been a "little uptick" in consumers who cannot pay their cable television bill in markets populated with homes bought with subprime loans.
"Everyone is trying to figure out what will be the impact of the subprime situation and so-called credit crunch," said the CEO of the No. 2 U.S. cable service operator.
He added that cable "has done well historically during recession."
Cable stocks have traditionally been viewed as a defensive play during an economic downturn as consumers were unlikely to cut their cable TV bill even as they reduce spending elsewhere.
But some Wall Street analysts have questioned whether that has changed, now that cable bills are significantly higher due to so-called triple play packages that combine video with Internet and phone services.
Goldman Sachs analyst Anthony Noto said cable operators would benefit during an economic slowdown as subscribers focus more on the savings they can get from buying all three services from one provider.
Britt said Time Warner Cable would not increase discounts for triple play in subprime markets to retain subscribers.
The company, which is 84% owned by media giant Time Warner Inc (TWX.N: Quote, Profile, Research), said last month it was participating in an auction to acquire cable systems from Insight Communications, a private equity-owned cable operator with 600,000 subscribers.
But Carlyle, Insight's majority owner, put the auction on hold due to the ongoing credit crunch in capital markets.
Britt said his company was still interested in investing in cable assets where appropriate.
"We would like to be bigger, but we're not deal-hungry," he said. "If something comes along at the right price, we'd buy."