Time Warner Cable Inc., the cable company that’s merging with Comcast Corp., reported earnings that trailed analysts’ estimates after losing more TV customers.
Second-quarter earnings, excluding some items, rose to $1.89 a share, the New York-based company said in a statement Thursday. Analysts estimated $1.90 on average.
Time Warner Cable lost 152,000 TV customers in a seasonally weak period when college students typically disconnect their service for summer vacation. Five analysts surveyed by Bloomberg News predicted a loss of 128,000 TV subscribers on average. The company added 67,000 Internet subscribers, better than the 62,000 average estimate.
Cable and satellite operators are seeing fewer new video customers as more consumers turn to online streaming or TV packages from phone carriers. In turn, the pay-TV industry is looking to acquisitions to get bigger and keep pace with surging broadband growth.
Time Warner Cable, second only to Comcast in U.S. cable subscribers, is awaiting regulatory approval for the merger, a deal the companies have pledged will boost returns for investors. Competitors have taken notice. After the $45.2 billion transaction was announced in February, AT&T Inc. said it would buy satellite-TV service DirecTV for $48.5 billion.
Time Warner shares added 1 percent to $151.42 at yesterday’s market close in New York. The stock has gained 12 percent this year through Wednesday.
The moves among pay-TV companies prompted Rupert Murdoch’s 21st Century Fox Inc. to make a $75 billion bid to buy Time Warner Inc. to maintain bargaining power against TV distributors. While the offer was rejected, major TV programmers are still evaluating how to respond to mergers on the TV distribution side that could affect negotiations of sales of licensing rights to the cable and satellite operators.
Should Fox and Time Warner merge, the combined company could reap an additional $1 billion in licensing fees from the pay-TV companies that carry its shows, according to Marci Ryvicker, an analyst with Wells Fargo & Co. Even so, that wouldn’t be a major increase for the cable and satellite companies, which already pay about $38 billion in total programming costs, she wrote in a note last week.
The urge to merge among both pay-TV companies and programmers is becoming more apparent as the number of Americans paying for television fell for the first time last year. The industry altogether lost about 251,000 TV subscribers in 2013, according to research firm SNL Kagan.
“The market’s decline can be traced in part to the growing number of so-called cord-nevers’ — those who object to ever having a pay-TV subscription,” researcher IHS said in August. “Equally as important, the price of a typical pay-TV subscription remains high, staying well out of reach for a number of consumers.”