Cable Technology Feature Article
TWC Sees Dismal Subscriber Losses for Q4
By Tara Seals, TMCnet Contributor
As Charter Communications (News - Alert) continues its takeover pursuit of the company, Time Warner Cable reported 5.3 percent year-over-year higher net income for the fourth quarter of 2013 to reach $540 million, on 1.7 percent higher revenue. However, its subscriber numbers were bleak.
The No. 2 cable MSO lost 217,000 residential video customers in Q4, compared with the 129,000 it lost a year earlier. The company also gained only 39,000 Internet customers, down from 75,000 added one year ago, and a paltry 1,000 residential voice subscribers, compared to 34,000 additions a year earlier.
For the full year, the results were magnified: TWC shed 833,000 video customers in 2013, compared to a loss of 532,000 in 2012. Broadband customer additions slowed to 154,000 from 433,000 in 2012. And, the company lost 218,000 home phone customers last year, while it added 191,000 the prior year.
Nonetheless, a 5.6 percent decline in video revenue was offset by 14 percent higher broadband revenue, largely from pricing increases. Overall, residential customer revenue declined just 0.1 percent to $4.58 billion.
Business services revenue jumped 20 percent to $616 million, and operating income was flat.
Despite the middling results, the company didn’t miss a beat, and outlined a three-year turnaround plan hinging on increased capital investment to move the company to all-IP infrastructure—this year capex will go up 16 percent to $3.7 billion, it said, including $100 million dedicated to the rollout of advanced technology in the company’s main markets of New York and Los Angeles, the company's most important markets. Crucially, it will roll out 300mbps broadband tier, the company said, to achieve parity with archrival Verizon (News - Alert) Communications.
No. 4 MSO Charter's offer to buy TWC—the third that it has made—came in at $132.50, but CEO Rob Marcus said he would only consider an offer for$160 per share, mainly cash. Charter has said that TWC has a failed operating strategy and is overvaluing itself at $160—a case it’s trying to make directly to TWC shareholders. TWC CFO Artie Minson warned on the earnings call that Charter and its owner, Liberty Media, will take the bad subscriber numbers as an opportunity to reinforce that message and paint TWC as a ripe takeover target. The "folks at Charter and Liberty are very smart guys" and "see a chance to force a trade before the public realizes what we can achieve with our standalone plan,” he said.
"We feel very good about our ability to run this business," he added.
Edited by Cassandra Tucker