Time Warner Cable's 2Q Results Prove Cable TV is Dying


Staff member
Time Warner Cable (TWC) may have seen its Q2 profit rise to beat estimates today, but bigger picture the headwinds show continued declines for the cable TV business.

While TWC earnings were up 6.4% and revenue was up 2.7%, the company lost 191,000 video subscribers on the quarter — up from 169,000 last year in the same period. While the high-speed internet business has been powering the company through some of these losses, the details show that Time Warner Cable is seeing slower growth in data subscriptions a with a measly 8,000 new customers vs. 59,000 new additions a year ago.

Shares are rallying over 5% in early trading for some reason despite these details, but any investor paying attention knows that cable TV is dying a slow death — and that Time Warner and competitors like Comcast (CMCSA) will only survive if they can keep charging more for data and growing fast enough to offset video losses.

That’s not a sure thing, either, especially as telecoms like AT&T (T) and Verizon (VZ) are competing both with landline data and wireless connectivity.
Read More: Time Warner Cable Earnings Prove Cable TV Is Dying

TWC has definitely been having troubles. Especially when you compare them against Comcast. Sure Comcast lost 159,000 video customers during the same period, but they have 10 million more customers to lose. If Time Warner Cable can't figure out how to add more internet customers they are going to be in real trouble in the future. The future is on the internet (and over the air). It makes me wonder about the dynamics though. Does Time Warner Cable's footprint overlap AT&T U-verse and Verizon FiOS more than Comcast? Is Comcast's retentions department just friendlier?

Meanwhile, it appears that AT&T is the big winner as far as video customers is concerned, they added 233,000 new video customers. Verizon FiOS added 140,000 video customers, and DirecTV dropped by 84,000 customers. Cablevision, Charter, and Dish Network are yet to report, but I'm expecting subscriber losses for all three. Cox and Brighthouse are private companies that don't have to make quarterly reports.
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