Price increases lead to slowdown in broadband growth for Time Warner Cable
Time Warner Cable Inc. said Thursday that it picked up 75,000 residential broadband subscribers in the fourth quarter of 2012, well shy of the 109,000 average estimate among Wall Street analysts polled by StreetAccount.
The shortfall occurred even after the second-largest U.S. cable provider boosted the speed of its standard high-speed data service by 50% to 15 megabytes per second, and added faster speeds of 75 Mb and 100 Mb-per second to existing tiers in a few markets.
Chief Operating Officer Rob Marcus told analysts on the call that slowdown in growth was “a conscious choice” the company made when it opted for price increases.
“Our motive [was] to raise residential ARPU by more than 6.3% in the fourth quarter; but that undoubtedly had the effect of elevating disconnects.”
As expected, Chief Executive Glenn Britt did address the company’s recent elimination of low-rated channels Ovation and Current and a deal announced earlier this week to show Los Angeles Dodgers games after Time Warner Cable prevailed in a bidding war against Fox Sports.
Britt said that dropping underperforming channels doesn’t “dramatically change to trajectory of programming costs,” but that eventually fewer channels can “improve the perceived price-value relationship” customers perceive.
“People who are under economic duress are looking at these big packages and saying, ‘This costs more than I can afford …and there are too many networks I never watch and I don’t care about.”
Time Warner Cable lost 129,000 basic video customers in the period, which was actually fewer than most analysts had predicted.