Time Warner Cable Loses Video Subscribers but Adds Broadband Customers

Plans to Extend Mobile Access From iPad to Android Devices, Game Consoles

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Time Warner plans to extend its mobile app from the iPad to other devices.
Time Warner plans to extend its mobile app from the iPad to other devices.

Time Warner Cable, the second-largest U.S. cable-TV operator, lost 126,000 cable subscribers in the third quarter as customers defected to Verizon's FiOS, AT&T's U-verse and DirecTV, the company and analysts said today. Analysts had predicted a loss of 113,000, according to data compiled by Bloomberg.

DirecTV's "Sunday Ticket" promotion, which gave new customers a free subscription to access all Sunday National Football League games during the year, likely accelerated Time Warner Cable's video decline, according to Vijay Jayant, an analyst at ISI Group.

Even as Verizon and AT&T take video customers away, however, Time Warner Cable is successfully fighting them in web-access business.

Its 105,000 net broadband-customer gain -- 89,000 residential clients and 16,000 business customers -- is four times more than AT&T and Verizon added this quarter combined, a sign that there is "unquenchable consumer thirst" for Time Warner Cable's product, Time Warner CEO Glenn Britt said on a conference call today. Verizon added about 20,000 broadband customers and AT&T gained 3,000.

Mr. Britt is positioning Time Warner Cable to be an internet provider first and a video operator second, according to Craig Moffett, an analyst at Sanford C. Bernstein & Co. "Broadband is Britt's anchor product now," Mr. Moffett said. "The cable operators are running away from AT&T and Verizon in the broadband business, which has become the engine that 's carrying Time Warner Cable."

Fourth-quarter video and broadband net additions are trending similar to a year ago, Time Warner Cable Chief Financial Officer Irene Esteves said on the conference call. Voice-line additions are trending lower, she said.

Overall customers -- video, phone and broadband for corporations and households -- fell by 16,000 in the quarter. "The aggregate customer number is one investors watch, and a negative number may cause the stock to be weak again," said Laura Martin, a Needham & Co. analyst.

Shares in the company fell the most in almost 18 months after it reported third-quarter profit that missed analysts' estimates because of its video-customer losses. But investors may be selling today partly as a protest to the company's decision to slow repurchases, said Amy Yong, an analyst at Macquarie Securities.

To fuel demand for its video product, the company introduced an application this year that lets people watch live programming on Apple's iPad as long as they are at home. Time Warner Cable plans to make the app available on other devices, Mr. Britt said on today's call.

The devices include Android-based smartphones and tablets, game consoles, internet-connected TVs and personal computers, according to spokesman Justin Venech.

-- Bloomberg News --

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