By DEBORAH YAO, AP Business Writer
PHILADELPHIA, Pa. – Time Warner Cable on Thursday reported higher second-quarter earnings as more customers signed up for digital cable TV, Internet and phone services. Advertising revenue jumped, driven in part by a rebound in automotive ads.
While the nation’s second largest cable TV company lost basic video subscribers in the seasonally slower quarter, it was offset by increases in digital cable customers and cable rate hikes. More people also leased digital video recorders and rented more movies.
Time Warner Cable earned $342 million, or 95 cents per share, up from $316 million, or 89 cents per share, a year earlier. Revenue rose 5.8 percent to $4.73 billion from $4.47 billion. Advertising revenue increased 24 percent to $216 million.
Results exceeded Wall Street expectations. Analysts predicted net income of 93 cents per share on revenue of $4.68 billion, according to a Thomson Reuters survey.
Free cash flow, a key metric of capital-intensive industries such as cable TV, fell 14 percent to $571 million.
Like other cable TV operators, Time Warner Cable continued to see a flight of video subscribers as they flock to rival services in a competitive environment marked by multiple promotions. But the company attracted more high-speed Internet and digital phone customers, mainly people who left phone companies’ DSL and traditional phone services. Time Warner Cable also experienced an increase in business customers signing up for its services.
The New York cable company’s results are similar to the trends seen by Comcast Corp., which reported earnings last week. But unlike Comcast, Time Warner Cable does not own any national cable channels to buttress the cable TV business so its results are a clearer indication of the state of the cable industry.
Cablevision Systems Corp., a New York regional cable operator, also reports earnings Thursday.
Time Warner Cable lost 111,000 video subscribers, but among those remaining, 50,000 more signed up for digital cable. Video revenue rose by 2.8 percent to $2.78 billion. Customers on average paid $72.56 a month for video, up 5.2 percent from the same quarter a year ago.
Time Warner Cable said Internet revenue rose by 9.7 percent to $1.23 billion while phone revenue rose by 7.2 percent to $505 million. Internet subscribers paid 3.3 percent more on average in the quarter to $42.88 a month, but phone pricing fell slightly to $38.64, as competition remained stiff.
The company ended the quarter with 12.7 million video subscribers in 28 states.
Time Warner Cable shares slipped 17 cents to $58.85 in premarket trading.
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