Time Warner Cable misses on falling video demand

(Reuters) – Time Warner Cable Inc, the second largest U.S. cable operator, reported a quarterly profit that missed estimates as the company lost more video subscribers than expected, sending its shares down more than 6 percent on Monday.

Like larger rival Comcast Corp, Time Warner Cable has been losing cable TV subscribers as customers cut back on discretionary spending and is increasingly relying on internet services to drive growth.

Cable operators are also facing stiff competition from satellite and phone companies’ video services and Internet-based services like Netflix Inc and Hulu.

Time Warner Cable lost 140,000 video subscribers during the third quarter, more than the loss of 131,000 customers ISI analyst Vijay Jayant was expecting. It added 85,000 internet customers, which was also lower than expected.

Bernstein Research analyst Craig Moffett said the company had under delivered, but added that the bright spot was the growth in political advertising thanks to Tuesday’s U.S. presidential election.

“Political advertising saved the day. It’s nice to be a seller of ad space in Ohio these days,” he said.

Advertising revenue rose 22 percent in the third quarter to $264 million.

The company was selling advertising like “gangbusters” ahead of Tuesday’s election and was even selling advertising inventory that it usually reserves for itself, Time Warner Cable president and chief operating officer Rob Marcus said.

Broadband services revenue grew 14.3 percent, including additions from Insight Communications. Time Warner Cable acquired Insight for $3 billion to expand in Kentucky, Ohio and Indiana.

Net income rose to $808 million, or $2.60 per share, for the quarter, from $356 million, or $1.08 per share, a year earlier.

Excluding items, the company earned $1.34 per share, versus analysts’ average expectation of $1.43 per share, according to Thomson Reuters I/B/E/S.

Revenue rose 9 percent to $5.36 billion, while analysts had expected $5.39 billion.

Shares of the company fell 6 percent to $92.06 on the New York Stock Exchange in late morning trading.

(Reporting by Sayantani Ghosh in Bangalore and Liana B. Baker in New York- Editing by Saumyadeb Chakrabarty)