A firm trend is emerging from this past week's spate of cable company earnings reports. The cable industry is on the run from competition. Yesterday, Time Warner Cable posted less-than-stellar results, showing continued loss of core video customers. That news came on the heels of Comcast's even more discouraging Q3 earnings report issued last week.
Two additional cable companies, Cablevision Systems (PDF here) and Charter Communications, weighed in today with their Q3 07 earnings results and the plot line stayed the same. New York area Cablevision has long been the strongest performer in the cable industry and despite a few high-profile disputes with programmers that temporarily prompted basic customer loss, the operator was one of the few cable companies to consistenly post basic customer gains.
Not anymore. Cablevision lost 17,000 basic cable customers during the quarter, slipping slightly to end the quarter with 3.12 million basic subscribers.
As is true of Comcast and Time Warner, Cablevision also experienced gains on the digital cable, telephony and high-speed fronts, although, like its larger peers, Cablevision's growth in these new service areas is slowing.
Charter, on the other hand, has been a consistently weak performer for years and years. The Paul Allen-backed cable operation has been steadily losing core video customers for years, and Q3 07 was no exception. During the quarter, Charter lost 40,200 basic video subscribers.
One bright spot for Charter: accelerating gains on the telephony front. During the quarter, Charter added 102,300 net new telephony customers, up from the 82,000 net new voice subscribers added during the year-ago quarter. At the end of Q3 07, Charter served 802,600 digital voice customers, representing 10% of homes capable of buying the service.
As the WSJ noted this morning, the picture for cable is getting fuzzier. Phone company competition, although still limited to only a scattered handful of (albeit important) markets, is a lot stiffer than the industry expected.
Moreover, the white-hot growth in triple-play bundle sales cooled off sooner than the industry expected. It's hard to visualize how the cable industry will jump-start lucrative growth -- plans for offering low-priced products is only a stop-gap measure for margin-obssesed cable operators.
Cynthia Brumfield at 4:46 PM|Comments(0)
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