Time Warner Cable says users bolted

Time Warner Cable blamed a fight with CBS Corp. for a huge loss of subscribers in August.
Brendan McDermid/Reuters/Files
Time Warner Cable blamed a fight with CBS Corp. for a huge loss of subscribers in August.

NEW YORK — Time Warner Cable on Thursday reported the steepest quarterly loss of television subscribers in its history, which it attributed at least in part to the monthlong battle that it had with the CBS Corp. in August.

The CBS blackout ended in early September. Still, when the third quarter wrapped up at the end of that month, Time Warner Cable had shed 306,000 of its 11.7 million TV subscribers.

It persuaded other subscribers not to cancel by offering credits for the downtime, particularly for Showtime, the premium cable channel owned by CBS that was also blacked out in August. Time Warner Cable disclosed Thursday that it dispensed about $15 million in such credits.


For the past few years, Time Warner Cable and other cable companies have lost small numbers of TV subscribers each quarter, but they have more than compensated by gaining broadband and phone subscribers.

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The dispute with CBS, however, caused so much subscriber anger that Time Warner Cable reported a drop in broadband and phone subscribers, as well. In broadband, the decline was slight — just 24,000 homes. But the results underscored, to a degree rarely seen before, the damage that can be done when distributors and programmers publicly feud because of contracts.

For comparison’s sake, Time Warner Cable gained 131,000 on the broadband side and lost 119,000 on the TV side in the first quarter of the year.

In the second quarter, traditionally the weakest for cable companies, it added 8,000 broadband subscribers and lost 191,000 TV subscribers.

Despite the subscriber slump, Time Warner Cable said revenue rose 2.9 percent in the third quarter, to $5.52 billion, partly because of continued gains in a relatively new category for the company, business services. The company said net income fell to $532 million, or $1.84 a share, from $808 million, or $2.60 a share, in the period a year earlier.


Excluding one-time costs, earnings were $1.69 a share in the third quarter, beating analysts’ estimates of $1.64 a share and exceeding the adjusted earnings per share of $1.41 in the third quarter of 2012.

Thursday’s earnings report was the last for the company’s longtime chief executive, Glenn A. Britt, who announced in July that he planned to retire at the end of the year. Robert D. Marcus, the chief operating officer, will succeed him.

In a statement that accompanied the earnings report, Britt said: “As I leave the business after 41 years, I am proud of this company and its many accomplishments. We have tremendous opportunity ahead, and I have full confidence in Rob and his team.”

This week, Britt told staff members that he was battling a recurrence of cancer, five years after a bout with melanoma. He said he was getting “terrific care” and would continue to work until the end of the year.

He spoke at length on Thursday’s earnings conference call with investors about his view of the cable business and ended his remarks by saying, “I believe the best is yet to come.”


There were slivers of good news for Time Warner Cable in Thursday. Along with growth in Internet hookups for businesses, the firm made significant gains in broadband revenue as more households chose to pay for faster, pricier service.

But Adam Ilkowitz of Nomura Securities called the subscriber losses “shocking.”