Time Warner Profit Falls, Despite Strong Subscriber Growth

By Lisa Beilfuss 

Time Warner Cable Inc. said profit fell 7.2% in its latest quarter, as higher programming costs and a pension expense offset higher revenue and subscriber growth.

The New York-based cable company in May struck a deal to be acquired by Charter Communications Inc. for $55 billion. The transaction, backed by cable mogul John Malone's Liberty Broadband Corp., follows a failed merger attempt with Comcast Corp. Time Warner and Charter have said they expect to complete the deal by the end of the year.

On Thursday, Chief Executive Rob Marcus said Time Warner intends to use the time between the signing and closing of the Charter deal to further strengthen its operations.

The company said higher programming costs cut into second-quarter profit. Those costs jumped 11% from a year earlier, driven by higher content costs at SportsNet LA, a regional sports network carrying the Los Angeles Dodgers' baseball games. Contractual rate increases, the carriage of new networks and higher costs per video subscriber also lifted programming costs during the quarter. The company also recorded a $27 million increase in its pension expenses.

Time Warner Cable said its added 66,000 residential customers overall--what it calls its best-ever second quarter and its first rise in any quarter since 2008. The cable operator added 172,000 high-speed data subscribers and 252,000 voice subscribers, while it lost 45,000 video subscribers in the second quarter.

In all for the June quarter, Time Warner reported a profit of $463 million, or $1.62 a share, down from $499 million, or $1.76 a share, a year earlier. Excluding items, per-share profit decreased to $1.54 from $1.89.

Revenue rose 3.5% to $5.93 million.

Analysts had predicted $1.81 in earnings per share on $5.94 billion in revenue.

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