Time Warner Cable Drops 306,000 TV Subs, In Part Because of CBS Blackout

Time Warner Cable Blackout

MSO cuts full-year revenue growth forecast after subscriber losses

The monthlong CBS blackout for Time Warner Cable customers in major markets was a key factor leading to the cable operator’s biggest quarterly loss of video subscribers in its history.

The cable company lost 306,000 residential TV subscribers in the third quarter, much higher than analyst expectations of a decline of 183,000, according to StreetAccount. TW Cable also dropped 24,000 high-speed data and 128,000 voice subscribers on the consumer side, as the cable operator incurred higher-than-expected losses across all three services.

With the subscriber losses, Time Warner Cable revised its revenue forecast for the full year. The MSO now expects full-year revenue to grow 3% to 3.5%, down from its previous forecast of 4% to 5%, CFO Arthur Minson said on the operator’s earnings call.

“The CBS dispute apparently took a much larger toll than anyone would have imagined, and this colored all of the results,” MoffettNathanson analyst Craig Moffett wrote in a research note. “That’s bad news for future programming negotiations, and not just for TWC. Every cable operator now goes to the table knowing that CBS not only won the war, but left TWC badly damaged even for having fought the fight.”

TW Cable president Rob Marcus, set to become CEO at the start of 2014 after Glenn Britt retires, said the programming dispute with CBS as well as a smaller one with Milwaukee-based Journal Broadcast Group elevated video disconnects in the quarter by a few percentage points, and resulted in a 10% increase in double- and triple-play customers dropping video.

While the programming spats “resulted in short-term pain for us… in the end, the deals we reached were still better than where we were,” Marcus said on the earnings call Thursday.

As leverage continues to tip on programmers’ favor over pay-TV distributors, cable mogul John Malone has assertively called for consolidation among operators to cut content costs and gain other synergies. Malone’s Liberty Media holds a 27% stake in Charter Communications, which has sought a merger with Time Warner Cable — but the larger operator has rebuffed those overtures.

Britt, speaking on his last earnings call ahead of his retirement, addressed the issue of consolidation, though he didn’t mention Charter or Liberty: “We are focused on making money for (shareholders), rather than just on some fuzzy notion of industry consolidation,” he said.

Bright spot for TW Cable during Q3 was business services, which grew revenue 20.5% to $594 million. Total revenue for the quarter was $5.52 billion, up 2.9%, and adjusted net income rose 11.6% to $489 million (excluding gains from its sale of SpectrumCo and Clearwire investments last year).

In the CBS fight, more than 3 million TW Cable customers lost access to CBS-owned stations in New York, L.A., Dallas and other markets, and the cable operator dropped Showtime and three other cable nets across the U.S. The networks went off the air Aug. 2; the companies announced an agreement resolving the standoff on Sept. 2.

Time Warner Cable also in the third quarter had an extended retransmission-consent fight with Journal Broadcast Group, affecting TV stations in Milwaukee, Wis., Green Bay/Appleton, Wis., Omaha, Neb., and Palm Springs, Calif. The companies reached a deal after a 58-day blackout.

The cable company said in announcing Q3 results that “subscriber activity in the quarter was negatively impacted by programming disputes with CBS and Journal Communications.”

TW Cable, the second-biggest U.S. cable operator after Comcast, had 11.41 million video, 11.05 million broadband and 4.81 million voice residential customers. The operator added 14,000 business services customers, with 606,000 customer relationships at the end of June.

Filed Under:

Want to read more articles like this one? SUBSCRIBE TO VARIETY TODAY.
Post A Comment 4

Leave a Reply

4 Comments

Comments are moderated. They may be edited for clarity and reprinting in whole or in part in Variety publications.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

  1. Bob Burns says:

    Time Warner Cable is the most overpriced product in the market, they get away with it because they bribe the local officials to make competition impossible. The markup on their typical cable package is over 2000%, that is an official number from somebody who used to work for them, and this is not well published but Time Warner throttles their customers internet speeds without any notification. You can compare them to old school Telco’s with their insane profits and market control.

  2. Happy Camper says:

    We cancelled because we are sick and tired of being ROBBED by the cable company. TWC laughs all the way to the bank…NOT THIS TIME.

  3. Tom says:

    TWC is and has always been a terribly run company. Their disdain for their customers is appalling.

  4. Ice-T says:

    Trust me, it’s not just the CBS problems, it’s that TWC sucks donkeys. They up their rates every year, tack on meaningless fees with no warning or explanation, and when you call to complain they give you a “promotional” rate that expires in six months, so six months later your bill jumps back up 40%.

    Their cable signal is spotty, their dvrs constantly glitch…I could go on.

    Suck it, Time Warner. Get used to the decline of your fortunes.

More Biz News from Variety

Loading