Time Warner Cable posts double-digit gains

Time-Warner Cable today announced double-digit growth in its revenues and the sales of its enhanced digital services and its high-speed Internet access services.

The unit’s results were announced as part of Time Warner’s general second quarter earnings call, and were generally dwarfed by the announcement that the parent company is setting aside $3 billion to settle shareholder lawsuits over its disastrous merger with AOL, even as it tries to re-launch the Internet access and content services as a content portal to compete with Yahoo! and others.

Unlike Comcast, which earlier this week also announced significant growth in selling higher-margin services over its digital infrastructure, Time Warner Cable has been aggressively marketing voice over IP, and has signed up 242,000 digital telephone customers in the second quarter alone. This comes in addition to 21% growth in high speed data and 19% growth in digital services.

“We had a very strong quarter, despite traditionally being a seasonally weak quarter,” said Don Logan, chairman of the Media and Communications Group of Time Warner, which includes Time Warner Cable. “We are expecting double-digit top-line and bottom-line growth for the foreseeable future. We are focused on maximizing revenues from the home. Our monthly subscriber revenue was up double digits for the sixth consecutive quarter and we had impressive results across all product lines.”

Digital phone service sold at a 60% faster pace in the second quarter of 2005, which may explain why Time Warner promoted Sam Howe, the marketing force behind digital phone, to chief marketing officer of Time Warner Cable.

Service bundling is also catching on – 70% of those who bought phone service also bought video and high-speed data, Logan reported.

“This is helping lower churn, which is down in every key product category year over year,” he commented. “Churn is at the lowest levels we’ve seen in years.”

Even basic subscriber numbers – where some cable companies have stumbled lately in competing with satellite – Time Warner Cable added a net 21.000 basic subscribers, which included losing 5000 subs in the seasonally weak second quarter. A year ago, the company lost 10,000 basic subs in first half of the year, Logan said.

Digital video penetration is now at 46% following the addition of 144,000 net subscribers. Time Warner also added 200,000 net high-speed data subscribers, some of whom came aboard as part of lower price promotions, Logan conceded. “But our data ARPU has remained relatively flat,” he said.

Time Warner Cable will add two new features in the coming year, both of which are being tested at present. The startover feature, which will move from a limited to a general field trial in Charleston, S.C. this fall, allows users to restart a show from the beginning at any point in its time-slot, “which is not something satellite can do,” Logan said. Within the next year, Time Warner Cable will roll out the switched digital video capability it is currently testing in Austin, Tex., to enable the company to reclaim bandwidth currently devoted to analog broadcasts and increase its advanced digital video offerings, he said.