TWC shows some promise in Q4, but still bleeds video subscribers

Time Warner Cable, Comcast’s merger in waiting, reported it lost 38,000 video customers in Q4 2014, and also missed earnings and revenue expectations. A year ago, TWC lost 85,000 residential video customers in the final quarter.

The company, which is a decision from an increasingly intense federal regulatory review of the proposed $45 billion merger that would create the country’s biggest ISP, did, however, add 168,000 new high-speed data customers, the “new gold” service providers are pursuing.

TWC currently is the second largest cable operator in the United States, behind Comcast.

The cableco said revenue rose to $5.79 billion from $5.58 billion, a 3.8% increase Y/Y, but still about $20 million short of analyst expectations. Earnings per share for the quarter were $2.03; analysts had expected $2.09.

Overall, TWC said, its quarterly subscriber performance was the best in at least seven years for several categories.

TWC said it added 67,000 total customer relationships, 295,000 residential voice additions and saw its triple-play numbers grow by 273,000 subs, the best fourth-quarter performances ever for that metric.

Broadband has been a critical piece of TWC’s – and other service providers’ – strategy moving forward as it looks to morph into a next-gen service provider. It has been steadily improving its network, raising speeds as customers demanding faster downloads and increasingly adopt bandwidth hungry over-the-top video apps.

It’s merger with Comcast is in large part a move to create a more powerful ISP with better leverage and market share as younger consumers — Millennials and Gen Edge – look to OTT services like Netflix, Hulu Plus and, soon, HBO Go, for their video entertainment, eschewing traditional pay-TV services, long-contracts and high prices for bundles in which they have little interest.

But the potential scale of that network has caused increased scrutiny of the deal by the feds, slowing the decision process. Just three months ago TWC CEO Rob Marcus said he expected the deal to be approved in the first part of 2015.

And, in a statement today he reiterated that the company expected the deal to close “soon.”

Until then, he said, TWC remains “100% committed to executing ourt plan.”

For the year, Time Warner Cable earned $2.03 billion, or $7.17 per share. That compares with $1.95 billion, or $6.70 per share, in the previous year.

Stay tuned.

Jim O’Neill is Editor of Videomind and Principal Analyst at Brightcove. You can follow him on Twitter @JimONeillMedia and on LinkedIn