Time Warner Cable started
the cable earnings season with a bang,
beating analysts’ expectations on
practically every financial metric in
the fourth quarter and easing fears of
continued video subscriber erosion by
improving basic-customer losses.
Time Warner Cable lost about
129,000 basic-video customers in
the period, an improvement over the
141,000 it lost in the same span in
2010. On a conference call with analysts,
chief operating officer Rob Marcus
said driving video improvement
was a 3% rise in new customer connections,
a direct result of increased
marketing, customer acquisition,
upsell and retention efforts — a program
the company calls “Get, Grow
Those efforts are having an impact across all product
lines — TWC added 117,000 high-speed data customers
(vs. 89,000 in the prior year); and telephone subscribers,
which had declined by 8,000 in the third quarter, returned
to positive territory with the addition of 37,000 customers.
That momentum is expected to continue into this year
with the addition of new products and the continued rollout
of a home security service — Intelligent Home — and
a joint marketing agreement with Verizon
TWC introduced about two dozen
new products in 2011 and expects the
innovation engine to continue to hum
in 2012. The Intelligent Home product
is available in five cities and should
expand throughout the year. In addition,
TWC is building out Wi-Fi access
in Los Angeles for its high-end broadband
customers (and for noncustomers
by selling Wi-Fi “day passes”).
A joint marketing agreement with
Verizon Wireless, part of the sale of
the wireless spectrum owned through
TWC’s SpectrumCo partnership with
Comcast and Bright House Networks,
will likely include bundling a wireless
phone component with the TWC triple
play initially, Marcus said.
The nation’s second-largest MSO
also is making strides in customer
service — most of its markets have two-hour service appointment
windows, with some at one hour, and the company
is experimenting with specific times for service calls
in certain cities. Marcus said TWC is further automating
the service process — the number of calls answered and
completed by an automated attendant improved by 40%
in 2011 and should expand another 30% this year, he said.
More customers are resolving service problems online,
and eff orts are afoot to enable more self-installation of
“The bottom line on customer service, we’re making
progress,” Marcus said.
Chairman and CEO Glenn Britt added that the efforts
show TWC is moving away from a one-size-fits-all philosophy
and is gearing products and services more toward
individual customer needs.
“That sounds like a lot; it is,” Britt said on the conference
call. “The marketplace for residential services is dynamic,
both in terms of customer expectations and the competitive
environment. In addition, the audience is bifurcating
— one group is extremely price conscious, perhaps due in
part to the ongoing economic malaise; the other group is
willing and able to pay more for more features and service.
We’re going to focus more attention on products and services
that best meet each group’s needs.”
So far, that focus is driving financial results as well. Revenue
was up 4% in the quarter (beating analyst-consensus
estimates of 3.5% growth), cash flow rose 8.7% (ahead
of 5-6% consensus), and net income soared 44% in the period.
“What’s not to love?” said Sanford Bernstein cable and
satellite analyst Craig Moffett in a research note.
TWC also made moves to give some of that good fortune
back to investors — it announced a $4 billion share-repurchase
plan (double the $2 billion analysts expected) and
increased its quarterly dividend 17% to 56 cents per share.
That also helped drive up TWC shares — they rose 7.4%
($5.08 each) to $74.19 in early trading Jan. 26.