That Time Warner (News - Alert) Cable finds itself the subject of takeover talk, rather than being an acquirer in its own right, will strike some observers as unexpected. Time Warner Cable, the second-biggest U.S. cable TV operator, long has been the second-biggest firm in the market, and such firms tend to be buyers, not sellers.

But it appears much has changed since the 1990’s. When Time Warner Cable, along with Cox (News - Alert) Cable, were viewed as among the very-best operators, in terms of customer service and investment in new technology and network operations.

In the latter 1980’s, Time Warner Cable launched what it called the “Full Service Network,” a highly-interactive services platform predating the Internet. In many ways, that commitment to testing the FSN was similar to the emphasis Verizon (News - Alert) was putting on the fiber to home network that eventually became FiOS.

Though by universal agreement FSN was a failure, it was the sort of move one would expect from a service provider whose market positioning always was more along the lines of “quality” than the underinvestment strategy pursued by Tele-Communications Inc., the largest provider.

Obviously, something has turned Time Warner Cable, still the second-biggest cable TV provider, into a seller.

Many would say an emphasis on shareholder return, rather than investment in its business, is the cause of the likely sale of the whole company, and the end of its existence.

Though some would fault Verizon Communications for spending too much on FiOS (News - Alert), Time Warner Cable made the opposite move, moving slowly to embrace and deliver new services based on new technology.  

As one concrete example, “Time Warner Cable's results in its New York systems have been shockingly bad since the roll out of FiOS," said cable analyst Craig Moffett of MoffettNathanson Research.

Time Warner Cable, facing FiOS, and not responding aggressively, lost  45 percent of its customers in the New York market to Verizon FiOS.

So though FiOS might face a tougher return on investment reality elsewhere, FiOS clearly was a success in the New York market, allowing Verizon to take huge amounts of market share from Time Warner Cable.

So there is a cautionary tale. As important as shareholder returns are, executives can be wrong in favoring the stock price more than the health of the basic business. Time Warner Cable decided to please shareholders, not its customers.

As a result, Time Warner Cable rather soon will cease to exist.