The cable industry has long boasted that it was largely immune to economic downturns, saying that home entertainment is one of the last things people cut back on. In Q3 at least, consumers appeared to reach their limit as Comcast (NSDQ: CMCSA), and now Time Warner Cable (NYSE: TWC) said that they lost basic video subs. TWC’s decline of 155,000 video subs, which resulted in a net loss of 17,000 video viewers, wasn’t as severe as Comcast’s 275,000 loss, suggests that the cable industry could be in for tougher times if unemployment and other economic indicators don’t improve.
Nevertheless, those potential troubles haven’t dented the company’s profits and revenues, which were up solidly as TWC separately announced that its cash flow position allowed it to initiate a $4 billion share repurchase program this morning.
Revenues grew mostly on video price increases. The growth of digital video subs and an increase in DVR service revenues also helped to offset the basic video subscriber declines and the drop in “transactional” VOD revenues.