Time Warner Cable, Cablevision Report Third-Quarter Subscriber Declines
DirecTV adds more customers than expected; cable executives argue there are no signs of cord cutting
NEW YORK - Time Warner Cable and Cablevision Systems early Thursday reported higher third-quarter profits, but also a decline in basic and digital cable subscribers, which led to a rare decline in total subscription units.
But TW Cable management on a call with Wall Street folks argued the company still hasn't found any evidence for cord cutting, or consumers cancelling their pay TV subscriptions to get TV content online. The company pointed to unchanged college town subscriber trends as one example. It signalled that continuing economic and housing market challenges, as well as heated competition are key drivers of subscriber trends.
To address subscriber losses and a still-weak economy, TW Cable CEO Glenn Britt said the company plans to launch a new budget program package or service tier. While he didn't disclose details about the new offer, Cablevision executives later in the day said this could be a good idea as long as program contracts allow for it. TW Cable management said its recent content deals allow it to put together such a lower-priced new package.
The weaker cable subscriber results came as satellite TV giant DirecTV reported a higher-than-expected 174,000 U.S. subscriber gain in the third quarter, which also beat the year-ago 136,000 additions. Its revenue rose 10% to $6 billion as profit jumpe 31% to $479 million.
TW Cable posted a 34% improvement in its third-quarter profit, exceeding Wall Street estimates. It reported a profit of $360 million as revenue rose 5% to $4.73 billion. Advertising revenue jumped 23%.
The company lost 155,000 basic video subscribers and even 46,000 digital video customers, but continued to add broadband and telephony users. In an unusual sign of weakness that the company had warned of, its total customer relationships declined by 60,000
But TWC delighted Wall Street with the announcement of a $4 billion share buyback program - bigger than analysts had hoped.
On its call, the company, which had considered changing its name, also said it has decided to keep the TWC name.
Meanwhile, Cablevision posted a third-quarter profit of $112 million, up from $99 million in the year-ago period. Revenue grew 5.6% to $1.8 billion as cable ad revenue jumped 30.2%.
Cablevision lost 24,500 basic video customers in the quarter ahead of its two-week loss of Fox programming in October, and digital video users declined by 4,200. The company grew its base of broadband and telephony users. As in TWC's case, total subscriber units were down - in this case 9,800.
Cablevision COO Tom Rutledge highlighted that the third quarter is always the company's weakest and that the housing market remains weak.