TWC haemorrhages video, Internet subs in dismal Q3

Michelle Clancy | 01-11-2013

Time Warner Cable turned in third-quarter results that shocked the Street, with a massive decline in video customers that almost doubled what analysts were expecting. And, unexpectedly, it lost Internet customers too.

The company saw a whopping 304,000 video customers on a net basis walk away, blaming a month-long blackout of No 1 US broadcaster CBS in August for the trouble. The company also lost 24,000 net residential Internet subscribers versus analyst expectations of an addition of 46,100.

Video revenue meanwhile was impacted by the $15 million in credits that TWC issued to subscribers to compensate for the blackout of Showtime during the retransmission spat with CBS.

Net income dropped precipitously for the quarter as well, coming in at $532 million, or $1.84 per share, down from $808 million, or $2.60 per share, a year earlier. Revenue rose 3% to $5.52 billion. Analysts had expected earnings of $1.65 per share on revenue of $5.54 billion, according to Thomson Reuters.

TWC also revised its expected full-year revenue downwards, saying that it expected it to grow 3% to 3.5%, down from its previous forecast of 4% to 5%.

Interestingly, merger speculation went on to lift shares 2.2% despite the disappointing results. Amid rumours that John Malone has approached TWC about a takeover via an investment in Charter Communications, CEO Glenn Britt on the earnings call simply said: "We are focused on making money for you (shareholders), rather than just on some fuzzy notion of industry consolidation."