TWC wards off telco, Web competition
Time Warner Cable’s (NYSE:TWC) biggest competitive threats are coming from telcos offering pay TV services, consumers turning to online content and wireless operators who still control of the voice market. In its second-quarter earnings today, the second-largest cableco outlined its strategies to fend off all three competitors, but acknowledged that it will be a tough battle.
“Given the slow subscriber growth in recent quarters we expect that revenue growth will slow in the second half of the year,” TWC Chief Financial Officer Rob Marcus said on today’s earnings call. Overall, TWC’s revenue increased 4.1% to $4.47 billion in Q2, while its total subscriber base remained at the Q1 level of 14.7 million.
Like its IPTV and cable competitors, TWC is struggling to find a way to compete with the Internet as more and more content is made free online. In an effort to stem video cord-cutting, the company recently launched TV Everywhere in partnership with Comcast. The initiative will let the cablecos control the distribution of TV content, offering it free online to paying TV subscribers. TWC has been testing the initiative with HBO in Wisconsin for the last 18 months, and Time Warner Chairman Jeff Bewkes said they plan to extend trials to other states.
Bewkes also said TWC will launch its 4G WiMax service in partnership with Clearwire in four cities before the end of the year. Bewkes said that TWC subscribes to the camp of thought that wireless and wireline businesses are intertwined together and the two complement each other, albeit with their own unique features. TWC partnered with Clearwire because it realized that wireless will not be able to beat wireline in speed or throughput anytime soon, he said.
The cableco also continued to lose video subscribers in the face of competition, which it saw coming more substantially from AT&T than Verizon. Bewkes estimated that telco video offerings were available to 24% of its footprint by the end of Q2, up from 22% in Q1.
“AT&T’s U-Verse product continues to be available to roughly twice as many of our homes passed as Verizon’s video offer,” he said. “We didn’t see substantial changes in competitive offers from AT&T in the second quarter. Verizon, which has some aggressive, but short-lived offers, actually increased triple play pricing in certain markets while expanding its netbook offering.”
