Time Warner Cable Lowers Its Forecast
Time Warner Cable the huge cable company is awaiting approval for a merger with Comcast Corp. On Thursday, it reported profit that did not meet Wall Street expectations and cuts its forecast for sales as its video subscribers continue to leave.
Earnings for the third quarter, excluding certain items, were down to $1.86 per share, in comparison to estimates by analysts of $1.90.
Time Warner Cable also lost over 184,000 video subscribers and its increasing costs for sports programming ate into its profit.
The company lowered its forecast for revenue for 2014 to $22.79 billion, which was below estimates by analysts on Wall Street.
Comcast and Time Warner Cable are relying now on more broadband users for growth in revenue, as new subscribers for television prove more difficult to come by.
The streaming service of Netflix and the upcoming online HBO subscription are focusing on younger viewers who would rather watch shows on the Web instead of paying $50 per months or more for cable.
One analyst said the numbers remained weak, as either management has not focused on its operations in the run up to the merger or they cannot operator well.
The dropping number of people in the U.S. playing for television is one reason behind the proposed takeover by Comcast for $45.2 billion of Time Warner.
One year ago, Time Warner reported it lost 306,000 video customers and another 24,000 in broadband. In this most recent three-month period, the company, based in New York, added 92,000 new subscribers to high-speed Internet.
The Comcast deal could take longer to finish than expected as federal regulators resolved certain disputes over the contract with programming.
While the FCC stopped the clock last week on its review, Comcast said it expected the deal would be finished in the early part of 2015.
Net income for Time Warner Cable dropped to $499 million equal to $1.76 per share. That was compared to last year during the same period of $532 million and $1.84 per share.
Sales increased by 3.6% to end the quarter at $5.71 billion which was less than estimates by Wall Street of $5.74 billion.
Content and programming expenses were up 9.6% to finish the quarter at $1.3 billion due to costs for the LA SportsNet channel that carries the baseball games for the Los Angeles Dodgers.
In July, the cable company reduced its profit forecast for the full year due to it being unable to get rival distributors of TV to pay fees it was asking for the rights to the sports network.
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