Revenue grew 4% to $5 billion
Time Warner Cable CEO Glenn Britt called the market for residential services “increasingly bifurcated,” with one group of customers increasingly price conscious and another insisting on top-tier service. But traditional linear television isn’t going away any time soon, he insisted Thursday.
Meanwhile, the drumbeat of pressure from rivals like Verizon and AT&T is steady but “manageable,” he said during a conference call to discuss fourth-quarter earnings. He noted that FiOS — a big competitor in Time Warner Cable’s New York City and upstate New York stomping ground — ramped up its marketing aggressively in the fourth quarter as it rolled out triple-play service.
TW Cable’s net profit jumped to $564 million last quarter from $392 million the year before. Revenue grew 4% to $5 billion. The cabler lost 129,000 video subscribers but offset that by adding others in high-speed data and voice, ending the year with 14.5 million customers.
The company said it returned $3.3 billion to shareholders in 2011 through share buybacks and dividends and announced a $4 billion share repurchase program. That and solid numbers boosted the stock, which was up 7% in mid-day trading at $74.
FiOS may be benefiting from a carriage dispute between TW Cable and MSG Networks that has yanked Knicks, Rangers and Devils games off Time Warner systems since Jan. 1. Britt didn’t discuss the spat on the call. A person close to the situation said Thursday that talks are ongoing but there is no meaningful progress.
About 1.3 million of Time Warner’s subs are in the New York area. Britt said FiOS overlaps with 12% of Time Warner’s footprint nationwide. “They are strong competitors, but we think we are up to the task. It is manageable relative to the size the business,” he said.
As they battle, the two companies are also partners. TW Cable recently sold Verizon unused spectrum and will be rolling out a wireless offering through the telco as part of a wide-ranging alliance.
TW Cable said residential-services revenues increased 2.6% year over year to $4.3 billion; video revenue was flat, offset by growth in high-speed data and phone service.
Business services revenues grew 37% to $409 million.
Advertising revenue decreased 10% to $242 million primarily as a result of a year-over-year decline in political advertising revenues. Hefty spending on key congressional races marked the fourth-quarter of 2010.
Britt downplayed doom and gloom reports of a cable biz threatened by streaming services direct to customers’ TVs. “We certainly pay attention to that,” he said, but TW Cable hasn’t seen an impact on video subscriptions.
Britt said most Americans keep the TV on for many hours a day and still like “linear” programming. Referring to cord cutters, he said: “There are people who do not watch TV very much and are quite satisfied to watch a few shows every now and then. We all know a lot of these people, and that effects our perception of the mass market,” he said.
Cable operators have generally been raising rates to respond to higher programming costs but Britt said, “It’s not an across-the-board thing…we have a wide array or products and we price it market by market” based on what the market will bear.