TW Cable, the second-biggest U.S. cable operator, said that costs related to the proposed Comcast merger included $29 million in employee-retention costs plus $33 million in advisory and legal fees.
While the company continued to shed residential video subscribers — dropping 34,000 in Q1 — Time Warner Cable touted it as the lowest quarterly loss in five years. The MSO’s momentum in broadband continued, as it added 269,000 high-speed Internet customers in the period. In the residential segment, Time Warner Cable now has more broadband customers (11.4 million) than TV subs (11.2 million).
Total revenue grew 2% year over year, to $5.58 billion, helped by 24% increase in business services revenue. That was slightly below analyst consensus estimates of $5.64 billion. TW Cable’s net profit jumped 19.5%, to $479 million; adjusted earnings per share of $1.78 (up 26.2%) beat Wall Street expectations of $1.68 per share.
“These results underscore our commitment to deliver on our financial and operating plan as we prepare for our merger with Comcast,” Time Warner Cable CEO Rob Marcus said in announcing the results. Marcus, who became the MSO’s chief exec Jan. 1, will reap $79.8 million in severance, bonus and stock if the Comcast deal is completed.
Time Warner Cable’s small decline in TV customers comes after it suffered sharp losses in the two previous quarters, dropping 306,000 and 217,000 for Q3 and Q4 2014, respectively. Those declines were partly the result of the monthlong blackout of CBS stations and other nets during a contract standoff last summer.
Over all, TW Cable tallied net additions of 148,000 customer relationships — the most in more than seven years — thanks to the surge in broadband.
For the first quarter, average monthly programming costs per video subscriber grew 10.1% year over year, to $36.51, which TW Cable said was driven primarily by contractual rate increases. Total programming costs, which include those for its L.A. Lakers regional sports networks and SportsNet LA, an RSN carrying Dodgers games and other sports programming, grew 2.9% to $1.3 billion for the period.
Capital spending rose 8.3%, to $834 million, for the first three months of 2014. TW Cable said the increase was driven by investments to improve network reliability, upgrade older customer-premises equipment and expand its network to additional residences, commercial buildings and cell towers.