Marketing

Subscriber Gains for Time Warner Cable

5/04/2007 8:00 PM Eastern

Time Warner Cable officials, holding their first quarterly conference call with analysts since going public in March, reported strong first-quarter financial results last week. The results were driven by continued growth in high-speed Internet and phone subscriber additions.

Revenue at the cable unit, which spun off from Time Warner Inc. as a separate, publicly traded company on March 1, rose 10% to $3.85 billion and adjusted operating income before depreciation and amortization was up 12% to $1.3 billion. The company said it added 356,000 high-speed data and 234,000 phone customers.

By the Numbers
Time Warner Cable subscriber additions:
1Q '07 1Q '06
Basic Video 46,000 82,000
Digital Cable 278,000 240,000
High-Speed Internet 356,000 346,000
Telephony 234,000 270,000
Source: Time Warner Cable

Digital-subscriber additions were 278,000 in the period and the company also added 46,000 basic subscribers.

Basic-subscriber losses at former Adelphia Communications and Comcast properties — acquired in the joint purchase of Adelphia with Comcast last year — continued in the first quarter but showed improvement. The acquired systems lost about 20,000 customers in the period — about 85% of that (17,000 customers) in systems in Los Angeles and Dallas.

But the losses were considerably less than the 40,000 customers shed in those systems in the fourth quarter.

On a conference call with analysts, Time Warner Cable chief operating officer Landel Hobbs said the Adelphia integration, after a few early hiccups, was moving ahead. The company has completed channel-lineup changes and high-speed data migration in the systems. Billing conversions, with only two systems left to go, should be finished by the end of May. Plant upgrades in the acquired properties should be completed by the end of the year.

Hobbs also pointed out that subscriber losses in Los Angeles and Dallas in the period were half that of the 40,000 lost in the fourth quarter.

“We believe we are well on our way to stemming subscriber losses in the acquired systems by the second half of this year,” Hobbs said on the conference call, adding that other acquired properties have shown extremely strong growth.

At Time Warner’s Midwest systems, located mainly in Ohio, net basic subscriber additions tripled in the first quarter and in its Norwich, N.Y., system, phone penetration reached 20% of homes passed just 45 days after the product was available, Hobbs said.

At parent company Time Warner Inc., the news was equally good. Revenue rose 9% to $11.2 billion and AOIBDA — a measure of cash flow — was up 19% to $3.1 billion, fueled by cable and its television networks.

At Time Warner Inc.’s cable networks — including Turner Broadcasting, CNN and TNT — revenue was flat at $2.4 billion but AOIBDA rose 6.2% to $937 million.

March