Time Warner Cable fell short of Wall Street’s expectations yesterday, with customers dropping their residential phone and TV subscriptions in the third quarter, but still managed to get a boost from broadband.
Analysts had expected TWC to add 20,000 phone customers and 113,000 video customers. Instead, the cable company reported that 8,000 customers got rid of their phone service—the first time that the company has lost residential phone customers—while another 128,000 customers cut their video subscriptions.
TWC’s programming bill increased by 3.5 percent over the same period last year, to $1.1 billion. At the same time, an executive said that customers were spending less on subscription premium channels and video-on-demand content.
The New York cable provider also warned that advertising revenue would be weak in the fourth quarter, partly because of reduced spending on political ads.
Luckily, TWC got a boost from its Internet subscriptions. The company added 89,000 customers to its broadband service. “In the span of just a year, broadband gross profit has grown from 36 percent to 40 percent of subscription gross profit, while video has contracted from 49 percent to 47 percent,” Bernstein Research analyst Craig Moffett told the New York Post.
Overall, third-quarter profits fell to $1.08 a share, failing to meet analysts’ expectations of $1.14, which drove down company stock by 7.7 percent yesterday, to $65.16.