In what will likely be its last ever earnings report, Time Warner Cable (NYSE: TWC) said it added 21,000 video customers and 314,000 high-speed Internet users in the first quarter.
The cable company, which is just weeks away from being gobbled up by Charter Communications, beat analysts' forecasts on revenue and profit. But the seemingly strong customer growth still came in short of some analyst expectations. Jefferies analysts predicted TWC would add 30,000 video, 320,000 HSD and 300,000 voice customers.
Still, growth is growth, and TWC CEO Rob Marcus declared Q1 to be "our best quarter ever" during his earnings call opening remarks, before thanking everyone, "As this is likely our last earnings call…It's been a really good run."
Factoring in 178,000 added voice customers, TWC says it added 236,000 total customer relationships, driven by 116,000 new single-play customers, 157,000 new triple-play customers, and a loss of 37,000 double-play customers.
Behind the mostly positive customer growth were better-than-expected increases to residential segment revenue and profits. Total residential revenues hit $4.93 billion, up 5.8 percent year-over-year and driven largely by an 11.9 percent increase in residential HSD revenue.
The MSO attributed the residential video revenue growth to increased equipment rental fees and premium network revenue, but said the growth was offset partially due to lower transactional video-on-demand, programming tier and DVR service revenue.
Coupled with a 13.4 percent annual increase in business services revenue, TWC brought up sales enough to raise overall net profit to $494 million for the quarter, up 7.9 percent year-over-year from $458 million.
TWC is in the home stretch of its pending merger with Charter and Bright House Networks. After FCC Chairman Tom Wheeler circulated an approval order this week and the Justice Department also gave its blessing, Marcus said the only hurdles left are final votes at the FCC and the California PUC. He said he was confident that the merger deal would close in May.
In joining Charter, TWC's residential and business segments will now be subject to the conditions—including no data caps for seven years—Charter accepted as part of approval.
Without usage-based pricing possible in the near future, TWC seemed confident that HSD would continue to be a growth driver. And the company scoffed at the interconnection condition of the pending merger.
"Interconnection as a revenue source has always been overrated," Marcus said.
Looking toward the perceived future of the pay-TV industry, Marcus praised TWC's work so far with its IP video product. He called it a "simple frictionless experience" that could significantly reduce capex and opex. Marcus touted the positive customer response in trial markets like New York City and said that's a reflection of pay-TV operators like TWC being more willing to offer customers new forms of video delivery.
"In the past we were much less responsive to what customers wanted," Marcus said.
For more:
- see this earnings release
- read this Wall Street Journal article
Special report: Tracking pay-TV earnings in Q1 2016
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