Time Warner Cable (NYSE: TWC) continued to lose video subscribers and missed its earnings estimates for the third quarter, raising more concerns that the pay-TV model is continuing to weaken for cable operators.
TWC, the nations second-largest cableco reported earnings per share of $1.08, missing the $1.14 mark Wall Street expected. Shares were trading down more than 8 percent, to about $64.71 mid-morning.
The company reported it saw 126,000 video subscribers drop from its roster. Vijay Jayant, an ISI Group analyst, told Bloomberg that the defections outpaced the 113,000 expected and that many likely had gone to competing services like Verizon's (NYSE: VZ) FiOS, AT&T's (NYSE: T) U-verse and DirecTV (Nasdaq: DTV). TWC also said it had seen its overall customer base erode by some 16,000 customers, a concern for investors.
As expected, in line with CEO Glenn Britt's contention that broadband growth is more important than video for cable companies, Time Warner Cable said it added 89,000 new broadband customers and increased revenue from its residential broadband business by nearly 8 percent; revenue from video sales, meanwhile, slipped 0,5 percent.
"Broadband is Britt's anchor product now," Bernstein analyst Craig Moffett said. "The cable operators are running away from AT&T and Verizon in the broadband business, which has become the engine that's carrying Time Warner Cable."
AT&T, Verizon and SureWest all reported video subscriber growth in the quarter, although both AT&T and Verizon missed projections.
- see this Bloomberg article
SureWest revenue up, income down
AT&T, Verizon pay-TV subscriber adds miss mark in Q3; will cable stutter, too?