Time Warner Cable (NYSE: TWC) reported losing only 7,000 pay-TV customers in the third quarter, a period that is turning out to be a particularly strong quarter for cable video subscriber performance.
The subscriber performance was TWC's best since 2006, and represented a vast improvement over the 184,000 video customers the company lost in the third quarter of 2014. The MSO is within 9,000 customers of posting positive subscriber numbers for the full fiscal year.
At a time when media investors are assuming that cord-cutting is a trend that's here to stay, cable is proving that the trend in pay TV just might be migration from satellite and telco to cable, not necessarily an exodus out of the pay-TV ecosystem.
Indeed, for TWC, the story was similar to Comcast (NASDAQ: CMCSA), which also enjoyed its best subscriber metrics in nine years (down only 48,000 subs). Comcast attributed its performance to its accelerated deployment of its X1 advanced video system. Likewise, Charter Communications (NASDAQ: CHTR) said it added 12,000 video customers in the third quarter, with its Spectrum Guide driving growth.
TWC said its Maxx product -- a premium video service that includes a six-tuner DVR -- recently completed rollouts in Kansas City and Dallas, and is having a similar impact on its churn. TWC added that in the first nine months of 2015, it deployed 8.3 million new set-top boxes, digital adapters and advanced modems in customers' homes.
TWC said its capital expenditures are up around 10 percent in the first nine months of this year over the same period last year, to $3.5 billion.
TWC's investment in Maxx, Newstreet Research analyst Jonathan Chaplin said, "will feed growth in future quarters and Charter investors will share in the benefits." TWC is in the process of being acquired by Charter.
The MSO said its residential high-speed Internet customer additions were 232,000 during the third quarter, also its best performance since 2006. The company reported net residential customer adds of 147,000 its best third quarter ever.
TWC said its third-quarter revenue was up 3.6 percent to $5.92 billion, missing analysts' consensus forecast of $5.96 billion.
Speaking to investors during the MSO's earnings conference call, TWC Chairman and CEO Rob Marcus confirmed the company is testing a streaming pay-TV service in New York. The service is an extension of the company's TWC TV multiscreen app.
"Our beta -- our IP video offering -- is not over-the-top," Marcus said. "This is a video service we're delivering over our facilities. What we're talking about here is a managed video service over our network."
TWC is still making sure the streaming service adheres to Title VI guidelines -- it must include things like closed-captioning, SAP and emergency alert services. The MSO is trying to upgrade the picture quality from standard definition to HD. And it wants it to have a full complement of channels, not a "skinny" bundle.
"We want to make sure the customer can have everything they have with a set-top," said Marcus, who implied that the demand for pared-down pay-TV packages is being over-rated.
"About 82 percent of our connects last quarter took our preferred video product," he said. "For all the talk about skinny bundles, we are doing pretty well with preferred video product."
- visit this Time Warner Cable investor relations site
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