Time Warner Cable Inc. share price down, income falls as customers walk away

Time Warner Cable Inc lost more TV customers than analysts had expected in the third quarter as more users signed up for online streaming services while the company awaits approval to merge with Comcast Corp.

Time Warner, the second largest U.S cable TV operator, reported a decrease of 184 000 net customers during Q3, an increase compared to the second quarters 152 000-loss of subscribers and above expectations by research firm StreetAccount of 136 000.

The company reported a 3.6% increased year-on-year revenue of $5.71 billion, including business services revenue up 21.9% and residential high‐speed data revenue up 10.9%. Operating income was 9% lower year-on-year at $1.15 billion. Adjusted, excluding some items, earnings per share stood at $1.86, lower than analysts projection of $1.90.

Net income fell 33% to $499 million in the three months ended September 30, compared to a net income of $532 million a year earlier, which led to a decrease in earnings per basic common share to $1.77, compared to $1.86 a year earlier.

Time Warners business services unit added more than 16 000 commercial buildings to its network in the third quarter, expanding its serviceable market opportunity by over $250 million per year.

Earlier this year, Comcast offered a $45-billion merger deal, which Time Warner agreed on. The agreement faced severe criticism from rivals, such as Hulu and Netflix, which explained that the new company would be too big to compete against. The merger deal would give the company around 40% of the U.S. high-speed broadband market.

Last week the Federal Communications Commission stopped the clock on its review to resolve disputes over programming contracts. However, lawmakers are expected to approve the merger with some conditions.

“We are executing well against our plan, with solid financial performance and strong subscriber momentum. We continue to expect the Comcast merger to close early in 2015” said Time Warner Cables Chairman and CEO Rob Marcus.

Time Warner changed its projection to around $22.8 billion full-year revenue, or growth of 3.1%, lowering its forecast made in July of growth in the range of 3.5%-4.5%. Analysts polled by Bloomberg estimated a $22.95 billion worth of sales in 2014.

Time Warner Cable Inc. fell 0.61% to close at $142.88 in New York, marking a one-year increase of 18.92%. The company is valued at $39.95 billion. According to the Financial Times, the 16 analysts offering-12 month price targets for Time Warner Cable Inc. have a median target of $165.50, with a high estimate of $198.00 and a low estimate of $150.00. The median estimate represents a 15.83% increase from the last price of $142.88.