Customers cutting back on premium products
Time Warner Cable reported a profit for the fourth quarter Thursday but the economy was still weighing on its customers, who cut back on their subscriptions of premium movie channels and ordered fewer videos on demand.
The nation’s second-largest cable TV provider also said it will start paying a quarterly cash dividend of 40 cents per share. That makes Time Warner Cable only the second major cable TV company to do so, after Comcast Corp. Cable operators typically plow cash back into their operations but have been under pressure from investors to provide a better return.
Time Warner Cable said its number of video customers fell in the fourth quarter, continuing an erosion seen at many cable TV operators whose subscribers mainly went to satellite TV. The cable operator also faces stiff competition from Verizon Communications in New York City, a key market the phone company recently entered with its FiOS fiber-optic service.
Time Warner Cable earned $322 million, or 91 cents per share, in the quarter. In the same period a year earlier it lost $8.16 billion, or $25.07 per share because of a charge to write down the value of the rights that municipalities have granted it to provide cable TV.
Revenue rose 3% to $4.53 billion, in line with the expectations of analysts polled by Thomson Reuters. Time Warner Cable’s earnings exceeded analysts’ expectations for a profit of 88 cents per share.
Video revenue rose just 1.6% to $2.69 billion, the smallest increase in at least two years. The company lost 105,000 video customers and those who remained were buying fewer premium channels and movies on demand.
High-speed Internet revenue gained 7.5% to $1.16 billion. Digital phone service rose 11.3% to $484 million.
Time Warner Cable, which warned in November that a third-quarter slowdown was spilling over to the fourth quarter, lost 55,000 customers to end the year at 14.6 million.
Time Warner Cable is taking a different road than Comcast, which is betting that it must be a major owner of entertainment content rather than just distributing it. Comcast plans to spend $13.75 billion in cash and the contribution of its cable channels to buy a controlling stake in NBC Universal from General Electric Co.
Time Warner Cable’s CEO, Glenn Britt, has said combining cable distribution with content didn’t achieve much when the company was part of Time Warner, leading to the companies’ separation last March.