Time Warner Cable loses only 45K video subs, best Q2 performance since 2008

Time Warner Cable (NYSE: TWC) reported a net decline of 45,000 pay-TV subscribers in the second quarter, its best second quarter subscriber performance since 2008.

The customer performance was a major improvement over the 152,000 video subs lost in the second quarter of 2014. TWC also added 172,000 broadband users in second-quarter 2015, which was also its best mark in eight years.

"We're thinking like long-term managers despite the pendency of the merger," said TWC chairman and CEO Rob Marcus, referring to the proposed $56.7 billion takeover of TWC by Charter Communications (NASDAQ: CHTR). "Until the deal closes, and we get regulatory approval, there's no choice but to run the business independently.

Reporting 3.5 percent year-over-year growth in revenue overall, TWC attributed its improved performance to its ongoing all-digital conversion and its rollout of advanced TWC Maxx services, which include broadband speeds of up to 300 Mbps.

TWC expects to have Maxx deployed in 40 to 50 percent of the U.S. by the end of the year, with rollouts underway in Kansas City, Mo.;  Raleigh and Charlotte, N.C.; Dallas; San Antonio; Hawaii and San Diego.

The company also says it's aggressively upgrading customer premises equipment, deploying nearly 5.6 million new set-tops, digital adapters and modems to residential homes in the second quarter.

Like its larger rival, Comcast (NASDAQ: CMCSA), TWC suffers from a bad customer service reputation. Rather than hiring an army of customer service reps and opening new call centers, TWC believes it can improve its reputation via operational improvements.

It reported 530,000 fewer repair calls in the quarter, as well as a 15 percent reduction in repair-related truck rolls.

Meanwhile, TWC said it benefitted from a tough quarter by telco-based competition, with Verizon FiOS (NYSE: VZ) and AT&T U-verse combining to add only 4,000 video subscribers, their worst second quarter for pay-TV customer growth ever.

TWC video connects were up in both FiOS and U-verse markets, and they were highest in the AT&T (NYSE: T) markets, Marcus said. Disconnects were also up in FiOS and U-verse terrain, and were highest where Verizon operates.

Asked by an investment analyst about over-the-top competition, Marcus said TWC will not shy away from continuing to advance its video products.

"The way to do that is compete aggressively and make sure our video product is the best that's out there," he said. "The breadth of content we offer is better than anything over-the-top, and the quality of the picture is better. I feel like we can compete with OTT. If we don't, shame on us."

As for offering paired down "skinny bundles" of channels, Marcus said TWC is still in the experimental phase. "We'll continue to watch it," he added. "We're fans of anything that gives customers flexibility."

For more:
- visit this Time Warner Cable investor relations page

Related articles:
TWC relies on in-house engineers, some contractors for Maxx hub upgrades
TWC to cover 3M customers with 300 Mbps Maxx service by year-end, including Austin
TWC adds 30K TV subs in Q1, experiences first growth in five years

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