Time Warner Cable, still months away from closing on its $78.7 billion merger with Charter Communications, continues to rack up strong results, dramatically reducing basic video subscriber losses and reporting its first positive customer relationship growth since 2008.
The cable giant lost about 45,000 basic video customers in the quarter, a big improvement over the 152,000 it shed in the same period last year. High-speed data additions of 172,000 (best Q2 since 2008) and 252,000 (best Q2 ever) additional phone customers helped drive overall customer relationships to 14.8 million, an increase of 66,000.
“We delivered very strong operational results in the second quarter, providing yet another clear indication that our plan is working,” TWC chairman and CEO Rob Marcus said in a statement. “We achieved record Q2 subscriber results across nearly every category, setting us up for accelerating financial performance as we look forward to the next phase of our plan. We intend to use the time between the signing and closing of the Charter deal to further strengthen our operations.”
Revenue increased 3.5% to $5.93 billion and adjusted operating income before depreciation and amortization declined 1.2% to $2 billion, driven by an increase in capital expenditures tied to its TWC Maxx initiative, increased programming costs and increased pension expense. The company said excluding a $27 million pension expense AOIBDA would have been flat.
TWC Maxx, including “all digital” conversion and Internet speeds of up to 300 Mbps, was completed in Austin in mid-April, and is underway in Kansas City, Dallas, Raleigh, San Antonio, Charlotte and Hawaii and will begin in San Diego in 2015. The company has said it has accelerated the deployment of TWC Maxx in Wilmington and Greensboro, N.C., in 2015. In the first six months of 2015, TWC deployed nearly 5.6 million new set-top boxes, digital adapters and advanced modems in customers’ homes.
Programming costs rose 11% in the quarter to $1.5 billion, driven by higher content costs at SportsNet LA, a regional sports network carrying the Los Angeles Dodgers’ baseball games and other sports programming.
Charter agreed to purchase Time Warner Cable in May in a deal valued at $78.7 billion. The deal is expected to close by the end of the year, pending regulatory approval.
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