Digital video recorders and high-definition see big boost

Time Warner Cable is taking the lead in rolling out video-on-demand to its cable systems. Company said it has already attracted 700,000 subscribers to its VOD and subscription VOD services across its footprint.

Speaking at a Merrill Lynch investor conference Thursday, AOL Time Warner chief financial officer Wayne Pace said in the company’s New York City franchise alone, combined pay-per-view, SVOD and VOD revenues for the second quarter were up 77% from the same quarter last year, excluding a big Lennox Lewis-Mike Tyson boxing match.

Pace said the group also is making progress selling its advanced set-top boxes, which include digital video recorders and high-definition. Company has so far signed up 200,000-plus customers for DVR-enabled boxes and just over 140,000 for high-def-enabled boxes.

TWC is considering a more aggressive move into delivering voice telephony. “We’re comfortable with the technology and excited about the opportunity to bundle voice with video and data,” said Pace, adding that a rollout will begin in the latter part of 2003 and into 2004.

Pace said at this stage, there are no immediate plans to launch an IPO of the cable unit as originally planned. But he did note that Comcast, which owns 21% of TWC, has the right to trigger the IPO process at any time.

As for the company’s other businesses, Pace predicted the online AOL division should return to growth in 2004 thanks to greater focus on profitability rather than the absolute size of its dial-up and broadband customer base.

As for its pending negotiations with Bertelsmann to merge its Warner Music group label business with BMG’s, Pace said, “There’s still a lot of work to be done” on the merger. He also said the company probably would be looking to sell its music publishing biz regardless of whether it completes the BMG merger. “Music publishing is not core and fundamental to our other business,” he said.

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