Time Warner Cable: Revs Up, Moves Toward Interactive Ads

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By the end of the year, Time Warner Cable plans to have 7 million homes that could deliver interactive ads served by Canoe Ventures, a company executive said Thursday.

Set-top boxes in the 7 million homes would be equipped with EBIF (Enhanced Binary Interchange Format) technology -- the platform Canoe is employing to serve iTV spots on national cable networks.

TWC now has 900,000 EBIF-enabled homes in the New York area as it moves toward its year-end goal. In addition to the potential with Canoe, TWC also wants to use the technology to deploy interactive ads it can sell in local markets.

Advanced advertising will be "a focus" at TWC in 2010, said COO Landel Hobbs. "The first step is implementation of EBIF, which is a set of standards underlying interactive application," he said.

By comparison to TWC's 7 million EBIF aim by 2011, Comcast recently indicated that it already has 13 million EBIF-enabled homes.



Canoe, for its part, is testing a request-for-information iTV system. A viewer could use a remote control to order a coupon or sample of an advertised product. TWC is part-owner of Canoe, along with five other cable operators. Canoe hopes to build a footprint of homes served by all six operators, where iTV ads on an ESPN or truTV could run coast-to-coast.

Hobbs spoke on a call with investors, where TWC discussed results for the recent October-December period and full-year 2009. For the fourth quarter of 2009, TWC said overall revenues rose 3% to $4.5 billion. It posted net income of $322 million.

Advertising overall is a small part of TWC's revenues (about 4%), but usually a profitable one. Like the market in general, however, sales suffered dramatically in 2009, down 22% to $702 million. Some of the decline could be attributed to fewer political dollars after the 2008 presidential election.

In the October-December period, excluding political dollars, sales were down 6.3% -- a significant drop, but much improved from earlier in 2009. Executives expressed optimism that 2010 would bring a return to growth, due in part to midterm Congressional elections. "We're poised to see growth in our high-margin advertising business for the first time in over a year, due to a strengthening ad market and political ad spending around the midterm elections," TWC CEO Glenn Britt said on the call. Speaking more broadly about TWC's operations, Britt cast doubt about an economic recovery so far: "We have not seen a material improvement" with "housing vacancies, unemployment and consumer confidence" still dragging. Hobbs said these are much higher than a year ago.


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