Time Warner Cable 2Q profit rises, but warns of continued slowing growth

Time Warner Cable 2Q profit up, but growth slows

NEW YORK — Time Warner Cable Inc., the second largest U.S. cable TV operator, on Wednesday reported a 14 percent increase in second-quarter profit but warned that subscriber growth continued to slow.

The outlook sent shares skidding $1.11, or 3.3 percent, to $32.78.

Chief Executive Glenn Britt also said there were signs in the quarter that its phone service customers are ditching landlines for cell phones. Previously, the concern was that video customers were cancelling service, but its turnover rate was flat in the quarter.

“There’s evidence of significant cord-cutting of voice in this environment,” he said in a conference call with analysts. “A tough economy is causing people to make that decision faster than they would otherwise.”

The company also said it plans to launch a high-speed wireless broadband service with Clearwire Corp. this fall, starting with four cities including Charlotte, North Carolina, and Dallas.

The New York-based cable TV system operator said net income rose to $316 million, or 89 cents per share, in the three months ended June 30, up from $277 million, or 85 cents per share, a year ago.

Excluding restructuring and separation related costs and other one-time items, it said net income totaled 91 cents per share. That tops the 78 cents a share analysts polled by Thomson Reuters, on average, expected.

Revenue rose 4 percent to $4.47 billion — up from $4.3 billion a year ago and above the $4.44 billion analysts expected.

But what spooked investors was slower growth than in previous quarters, and signs that the deceleration continued into the third quarter.

“Investors are looking ahead already,” said Standard & Poor’s analyst Tuna Amobi. “Results were respectable … (but) the biggest question is the second half.”

In the quarter, Time Warner Cable added 204,000 lines of video, Internet and phone services, down 69 percent from a year ago. It ended the quarter with 14.65 million customers, down from 14.74 million a year ago. An existing customer can order additional services and add to the total lines of service but not the subscriber count.

Overall revenue was up 4 percent, down from more typical percentage increases in the mid- to high-single digit range, Amobi said.

Video revenue was up 3 percent to $2.7 billion, boosted by video-price increases and higher digital video subscribers, partly offset by a year-over-year decline in basic video subscribers and premium channel subscribers.

High-speed data revenue rose 9 percent to $1.1 billion helped by new subscriptions. But Time Warner Cable lost its position as the third largest Internet service provider to Verizon Communications Inc. The cable company ended the quarter with 9.05 million residential and small-business Internet subscribers compared with Verizon’s 9.11 million customers.

Voice revenue grew 19 percent to $471 million as digital phone subscribers grew, offset by lower average revenue per subscriber.

Advertising revenue fell 25 percent to $174 million, dragged down by a slump in auto ads.

Media conglomerate Time Warner spun off Time Warner Cable Inc. in March. Time Warner also reported earnings on Wednesday. Its profit fell 34 percent as revenue from its publishing, movie and online properties fell 9 percent.

AP Business Writer Mae Anderson and AP Technology Writer Peter Svensson in New York contributed to this story.