Time Warner Cable Reports First Quarter of Video Subscriber Growth Since 2009

Courtesy of Time Warner Cable
Time Warner Cable CEO Rob Marcus

Earnings fall short of expectations, but "by almost any measure, the first quarter was our best subscriber quarter ever," said CEO Rob Marcus.

Time Warner Cable on Thursday reported lower-than-expected first-quarter earnings, but posted its first quarter of video subscriber growth since 2009.

The cable operator, led by chairman and CEO Rob Marcus, reported earnings of $458 million, compared with $479 million in the year-ago period. Earnings per share reached $1.65. Wall Street had on average projected earnings of $536.5 million, or $1.88 per share. Revenue rose 3.5 percent to $5.78 billion. The company said its results included $16 million in merger and restructuring costs.

TWC added 30,000 residential pay TV subscribers in the latest quarter, compared with a loss of 34,000 in the year-ago period. It had lost 38,000 residential subs in the fourth quarter, compared with 85,000 in the year-ago period. The company ended March with 10.819 million residential video subscribers. TWC's business services unit added 3,000 video subscribers to end the first quarter with a total of 206,000.

The cable company, in its first financial report since Comcast had to abandon its plan to acquire the firm, posted a return to pay TV subscriber growth, which Comcast had reached last year after 26 quarters of declines.

"By almost any measure, the first quarter was our best subscriber quarter ever," Marcus said. "We’ve made significant investments to improve our customers’ experience and our operational performance, and they are paying off. We are a far stronger company than we were just five short quarters ago."

Residential broadband subscriber net additions reached 315,000 in the first quarter, marking the best performance since the first quarter of 2007, while voice subscriber additions of 320,000 marked the best quarter ever. Total residential customer relationship net additions of 205,000 also saw the company's best quarter ever.

Marcus on Thursday also emphasized similar themes he had highlighted when the Comcast deal was called off, saying: "Our company has terrific assets, a world-class team and a well-architected operating plan; I am confident we can drive meaningful growth and create even more value for our shareholders."

When the Comcast deal was dropped, he had said: "We have always believed that Time Warner Cable is a one-of-a-kind asset. We are strong and getting stronger. Throughout this process, we’ve been laser-focused on executing our operating plan and investing in our plant, products and people to deliver great experiences to our customers. Through our strong operational execution and smart capital allocation, we are confident we will continue to create significant value for shareholders."

Charter Communications, in which John Malone's Liberty Broadband owns a big stake, is widely expected to start discussions about a possible deal with TWC soon.

Wells Fargo analyst Marci Ryvicker said about the first-quarter results: "Subs were great, but financials and ... guidance miss the Street."

Twitter: @georgszalai