Time Warner (NYSE: TWX) Cable’s latest quarter continued the general strength in cable this quarter, and the market share inroads being made over the telcos. CEO Glenn Britt acknowledged the weak economy, saying it meant the company couldn’t rely on new housing development for subscriber growth. But overall, the tone was very bullish. On high speed data he noted, TWC had this quarter: “twice the net adds of the two largest telephone companies combined.”
The other weak spot was local advertising, which has been crushed across the board. Although it’s not a huge part of the TWC top line, just $233 million of $4.3 billion total revenue, it is a high margin, so the meager 3 percent growth did drag down earnings (Britt didn’t say how much though). For the current quarter, things are already looking weak with no light at the end of the tunnel yet (consistent with what everyone else is saying).
Network DVR: TWC is in an odd position as it pertains to the recent network DVR ruling. That’s because its current parent, through its ownership of Turner, has lead the fight opposing the network DVR…
Lots more after the jump…
CEO Glenn Britt said his company would deploy it, though his tone and words were pretty cautious: “I think first of all on the basic technology… we’ve said for a long time that centralized, network DVR is a better engineering solution than having hard drives over everyone’s homes. That’s almost self evident from a technical sense. If this particularly court case is upheld… we will deploy that.” But he noted that there are still likely to appeals, and they’re not yet at a greenlight: “This is all more complicated than the headlines appear… Maybe this will all be fine and we’ll deploy it, but I don’t think we really know that yet.” Later on the call, Pali’s Rich Greenfield pressed again on this issue, particularly as it relates to the TWC-TWX tension on this issue. Britt tried to downplay that, and suggest it’s just a matter of legal interpretations: “The network DVR thing is pretty straightforward both outside and inside Time Warner… there’s a question about what the law really is in this area. The plaintiffs, which include Time Warner, argue that this requires permission from the copyright holders.” He added: “The engineering attraction of the network DVR is clear… what isn’t clear is the law.”
Churn: The weak economy is having a surprise effect on churn, which is actually down. Britt explained what’s going on: “The biggest cause for churn is people moving… what we’re seeing is lower churn.” Basically: “Unfortunately (it’s) a sign that people can’t sell their houses… it happens to help our business.”
Wireless: Not much new to report on that front. Still no evidence that consumers really demand quadruple play, though the company always works behind the scenes to design those products if they need to bring them to market. 4G/Clearwire… more to come on that, but the economics are different.
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