Time Warner Cable reported solid second-quarter earnings with a decline of only 9,000 in basic-video subscribers, which totaled 13.297 million for the three months ended June 30.
That decline came amid fierce competition with satellite and telco video rivals, and it was less than analysts forecast.
Net income at the nation’s second-largest cable-system operator rose modestly to $277 million, or 28 cents per share, from $272 million (28 cents) a year ago. Nonrecurring costs from its pending spinoff from 84% owner Time Warner and impairment charges reduced earnings by 6 cents per share, or $62 million, so earnings would have been much improved without onetime items.
Revenue rose 7% to $4.3 billion. Video revenues jumped 2% to $2.6 billion, high-speed-data revenues rose 12% to $1 billion, voice revenues climbed 39% to $397 million and advertising revenues grew 3% to $233 million.
A Merrill Lynch note to investors said Time Warner Cable “reported strong subscriber metrics that met or exceeded expectations across the board. The basic-video-subscriber loss of just 9,000 reflects a meaningful improvement from the 2Q ‘07 loss of 57,000” subscribers. The investment house expected a decline of 25,000 basic-video subscribers in the second quarter.
Merrill Lynch added, “Basic-subs results improved on the turnaround the Adelphia [Communications] systems [acquired by Time Warner Cable], which had been a drag on 2007 results, and likely lower churn from increased triple-play penetration and lower housing activity.”
In providing guidance to investors, Time Warner Cable expects full-year-2008 revenue to grow by around 9% and earnings per share to be $1.10-$1.15, slightly lower than stock analysts forecast. The company reaffirmed guidance of at least a 40% hike in free cash flow for the year.
