Time Warner Cable: Profits Rise, Fewer Subscribers
Time Warner Cable registered big profit gains for its fourth quarter -- but continued fewer video subscribers.
The second-biggest cable TV operator in the country improved its net profit 22.2% to $392 million in the fourth quarter of 2010, with revenues gaining 5.9% to $4.8 billion.
But as has been the trend for many cable system operators, Time Warner lost basic video subscribers -- 141,000. Still, Time Warner continued to show strength in its newer products -- Internet and phone business, adding 94,000 data subscribers and 72,000 phone subscribers, respectively.
Triple-play business -- packages containing video, data and phone -- improved 72,000. Multiple product sales to consumers totaled 8.5 million, which represents almost 60% of all Time Warner's customer relationships.
Riding on the back of a resurgent local TV ad market, Time Warner said local ad sales increased 34% to $269 million -- much of this coming from improved political advertising dollars.
This year looks good as well. Time Warner expects double-digit percentage gains in operating income.
Concerning the prospect of "cord-cutting" -- continued defection by consumers to other newer digital technologies to get their TV programming -- many companies, including Time Warner, say there is little sign of wholesale, major transitions by consumers.
Glenn Britt, chairman/president/CEO of Time Warner Cable, said on Thursday that although online video subscription services may have better user interfaces than traditional pay-TV services, these businesses depend on cable's broadband business to work well.
In the future, he said, cable set-top boxes could be replaced by emerging technologies like Web-connected TVs and mobile devices.
Britt stated: "We made great strides financially and operationally in 2010. We achieved record free cash flow and continued to deliver on our shareholder-oriented capital allocation strategy. At the same time, we enhanced our products and services, increased the sophistication of our marketing and accelerated the growth of our commercial business."