Intellectual Property Law

Time Warner Cable Boosts Its Broadband Share

By Cynthia Brumfield

In keeping with the virtually universal theme this earnings season, Time Warner Cable issued its Q2 08 earnings results (PDF) this morning, showing continued robust growth in broadband, digital voice and digital service subscriptions, even as overall basic subscriber counts notched down.

During the quarter, TWC added a net 201,000 high-speed subscribers, a run-rate about 7% higher than the net adds during Q2 07 and a gain that constituted "more net adds that the two largest phone companies combined even through their geographic footprint is three times the size of ours," CEO Glenn Britt said during the company's earnings call. "The clear implication is that we?re continuing to take residential broadband share." By quarter's end, TWC served 8.125 million high-speed customers, representing almost 31% penetration.

Despite its maturity, Time Warner Cable's digital voice service also added more net new customers than it did during the year-ago quarter. TWC gained 251,000 net new residential voice customers during the quarter, up from the 241,000 net new subs. reported for Q2 07. At the end of the quarter, Time Warner served 3.4 million voice customers, representing 13% of homes passed.

Even the very mature digital TV service grew at an accelerated year-over-year rate, with TWC adding 200,000 net new digital customers, up 8.7% from the net digital adds during Q2 07. By the end of Q2 08, 63% of TWC's basic customers were purchasing digital TV.

In contrast to this healthy service growth was the loss of 9,000 core video subscribers, reversing the strong net basic customer gain during Q1 08 but still down from the 57,000 basic subscriber loss during the year-ago quarter.

Total cable revenues grew by nearly 14% year-over-year to $4.3 billion, while cash flow advanced by only 9% to $1.57 billion due to restructuring charges related to its spin-off from parent company Time Warner Inc. and a Q2 loss on cable systems held for sale. Even with the solid fundamentals, Time Warner Cable cut its earnings outlook for the year due to ongoing restructuring charges and the system loss.

During the call, company execs discussed Cablevision's big appeals court win that permits the fellow operator to proceed with its networked DVR service. Time Warner Cable is one of the pioneers of networked DVR service and currently offers a service, Start-Over, that is rooted in the concept.

"We?ve said for a long time that centralized network DVR is a better solution than having hard drives in everybody?s homes. If this particular court case becomes law, we will develop that," Britt said. But don't look for immediate launch of a networked DVR option -- legal challenges still lie ahead and "this is all a lot more complicated than the headlines," he added.

(Download easy-to-digest, detailed current and historical data on Time Warner Cable at our corporate web site here. The data is free although registration is required.)

Full post as published by IP Democracy on August 06, 2008 (boomark / email).