Time Warner Cable’s future is in broadband, not TV


Staff member
From The Article:

The majority of Time Warner Cable’s subscribers and the bulk of its revenue still come from its traditional pay TV service, but that is changing — and fast. As a result, the company is betting on broadband to lead it into the future, due to wider adoption of high-speed data services at the same time TV subscribers are declining...

...Pay TV services still account for more than half of Time Warner Cable’s top-line revenue, according to the WSJ. But the gap between TV revenues and broadband revenues continues to narrow, as pay TV subscribers depart and new broadband users join. Time Warner Cable lost 130,000 pay TV subscribers in the second quarter, bringing its total down to 12.1 million by the end of June. That compares to 12.7 million pay TV subscribers that it had by the end of last year’s second quarter. Meanwhile, its broadband subscriber count increased to 9.7 million from 9.3 million a year before.

Time Warner Cable isn’t alone — the broader pay TV industry lost a record number of subscribers in the second quarter, due in part to the down economy and weak housing formation. But there’s also the specter of cord cutting hovering over the industry, as a growing number of viewers turn to online video services for entertainment. For a provider like Time Warner Cable, that’s not necessarily a bad thing: After all, those viewers of online video still need a broadband connection to view that content.

It’s not just that broadband continues to make up a bigger portion of Time Warner Cable’s revenue and users, but the margins on broadband are much better than those for TV services. That’s because cable companies share their TV revenues with programming partners, and those costs continue to go up as networks raise rates year after year. According to Time Warner Cable, video programming expenses grew 4.1 percent in the second quarter, to $1.1 billion, due to rate increases and higher retransmission expenses...

...Courting broadband users as its key demographic instead of pay TV users might not be sexy, but it is an acknowledgement of where the market seems to be headed anyway.
Read More: Time Warner Cable’s future is in broadband, not TV — Broadband News and Analysis

I'd note that many smaller telecoms that have TV service such as Frontier and Consolidated Telephone of Nebraska are dropping their own service in favor of partnering with a satellite company (both have contracted with Dish). The dual revenue stream model of cable networks (and now broadcast networks and stations) may be what drives multi-channel video to its death. :doh: Long live free wireless TV!!!