Revenues and profits grow but TWC video subs sink

Editor | 06-11-2012

In what seems to have become a meme for MSOs worldwide, Time Warner Cable (TWC) has revealed rising profits and revenues for its third quarter but on the back of a declining video business.

Revenues for the third quarter of 2012 were $5.4 billion, a 9.2% increase on the corresponding period in 2011. Residential services revenues increased 7.0% to $4.5 billion and business services revenues grew 27.4% to $493 million, while advertising revenues increased 22.2% to $264 million.

TWC revealed that residential services revenue growth was primarily driven by an increase in high-speed data revenues, partially offset by declines in video and voice revenues. Specifically, video business revenues in the quarter inched up 3.7% year on year to $2.722 billion, while year to date video revenues for the nine month period was $8.23 billion, a 3.7% uptick. Yet while on the rise, the video business growth compared badly with the residential high-speed data business which grew 14.3% and 12.5% for the respective three-month and nine-month periods.

The MSO conceded that residential video revenues decreased driven by declines in video subscribers and transactional video-on-demand (VOD) revenues. These were partially offset by price increases, a greater percentage of subscribers purchasing higher-priced tiers of service and increased revenues from equipment rental charges. The growth in residential high-speed data revenues was said to be the result of growth in high-speed data subscribers and an increase in average revenues per subscriber, due to both price increases and a greater percentage of subscribers purchasing higher-priced tiers of service.

Commenting on the results, TWC CEO Glenn Britt said: "Our third-quarter results were good, with most trends similar to the preceding quarter. Our operating results were driven by continued strong performance in residential high-speed data and business services, acceleration in high-margin political advertising and the contributions from our Insight systems. During the quarter, we remained focused on investing in growing our business, while at the same time ramping capital returns to our shareholders."

In announcing the results to financial analysts, and clearly identifying where future business opportunities may occur, TWC said that going forward it would increase the speed of broadband tiers over the next two months.