So, look, I pick on them a lot. But why shouldn’t I? Time Warner has some of the lowest customer satisfaction on the planet, their products are often out of date, and let’s not forget that they’re holding Southern California sports fans hostage with ridiculous pricing on their Dodgers channel. But I have to give them credit where credit is due.
According to their latest statements, they did pretty well last quarter, aggressively adding data customers and even managing to add new TV subscribers for the first time since 2006. Yes, you read that right, they hadn’t had a net positive year in TV since Daniel Powter’s “Bad Day” topped the charts (yes, I know that you now have that song crawling around in your head, you’re welcome.) That’s an awfully long time to go without a win and all I can say is obviously they were due.
Again, let me be fair. Time Warner is aggressively upgrading its network to offer 300Mbps service, which they’re offering at a really good price. This is enticing to customers who rely on streaming more than they rely on live TV, at least until their network gets clogged. They’ve been trying hard to improve their DVR experience and have been advertising very low prices in the areas they serve.
Of course I have to point out that “a stopped clock is still right twice a day.” To say that TWC has had a good quarter after 47 bad ones doesn’t mean there’s a trend there. The company’s had some management changes and has been in the news a lot, so customers may just feel like they’re comfortable investing a year or two on contract with them. No doubt they also benefited in the short run from their near-exclusive deal with the Dodgers organization and the fact that the baseball team did pretty well. That will come back and bite them of course, since they’re bleeding cash on the programming side — they spent SIX BILLION DOLLARS on programming expenses and they’re not making that money back by selling TWC SportsNet LA to anyone… no one’s buying it at the prices they’re offering.
I tend to think that Time Warner Cable will be sold by the end of 2016 if it can find a partner the FCC approves of; the merger with Comcast fell apart fast when the FCC started poking into it. There have been rumors that AT&T could be interested, which would make some sense and increase their footprint in terrestrial TV, but I have to wonder why the smart people at AT&T would take on a TV system like Time Warner Cable unless the internet part of it was really, really attractive. Bright House Networks seems like a much more likely suitor, although they are smaller than TWC so it would be more like a merger of equals. Perhaps former corporate parent Time Warner (who no longer owns the cable company) will suck it back in and try one more time to build a vertical content empire.
A lot of the changes we could see are really dependent on what people think will happen in the next presidential election, and whether there’s a feeling that the next administration will be easier or tougher on business. The FCC, for being full of Democratic appointees, spent most of the last eight years as a fairly business-friendly operation, but has recently taken a much more pro-consumer, pro-competition turn and this has left large communications providers a little spooked. If the feeling is that we’ll see a turn back to business in 2017 and beyond, we may start to see big changes at companies like Time Warner Cable. The one thing we probably won’t see is a string of growth quarters in their TV business. My prediction is that was a one-and-done.
So enjoy it, TWC, I’ll be back to laugh at you next quarter.