"They under-invested in their core video product and were super aggressive in capital returns which has done great things for their stock price but has left them in a poor competitive position," Brean Capital analyst Todd Mitchell tells Reuters in a piece exploring why Time Warner Cable suddenly finds itself as an underperforming acquisition target whose video subscribers are defecting at a faster rate than industry leader Comcast.
The report notes that since Time Warner Cable's split from Time Warner in 2009 (the same year of their failed attempt to force metered billing on all users), the company's prioritization of investor returns over infrastructure, customer satisfaction or customer support appear to have come home to roost.
In addition to neglecting the company's TV services in many markets, the company was often sluggish in terms of network upgrades, still offering considerably slower speeds than Comcast in the vast majority of their markets. Reuters notes that even in the face of more serious threats (FiOS in New York City is noted) Time Warner Cable didn't do as much as other providers to improve their services.
"Time Warner Cable's results in its New York systems have been shockingly bad since the roll out of FiOS," Craig Moffett tells Reuters, estimating the cable operator lost a staggering 45 percent of its New York subscribers to Verizon. "And they haven't improved much since."
I have been threatened with higher prices for complaining to the company. If there were any other choice... -- No trees were harmed by this posting, but a large number of electrons were terribly inconvenienced.
TW is certainly focused on profits, but Comcast actually provides less real bandwidth, and FiOS charges more.
I agree. They dont take into account the caps of the other ISPs. Id take 50 or 100/5 over faster with some stupid 300 gig cap.
Overall ive been pretty happy with the TV product. HD channel count is very high and I like the technologies they have brought out over the years in StartOver and LookBack. -- Usenet Block Accounts | Unlimited Accounts
The big problem is corporations never seem to find that happy medium between investing in their business and satiating Wall Street's desire for ever increasing quarterly profits and higher stock prices. I am all for higher stock prices as I have investments in many companies. However, if that comes at the cost of winding up with a hollow shell of burned out company that will basically be worthless two years down the road, then forget it. I can wait five years for an ROI but it seems many brokers cannot. This TWC story is typical of what we will be seeing more of. Especially in areas where new upstarts such as Google Fiber and FiOS offer competition. Unfortunately, FiOS expansion is done so people should not be hoping to see it if they do not have it. Perhaps our only hope is Google. -- I support the right to keep and arm bears.
Agreed 100%. Greed truly destroys companies (and people for that matter) that have value. If investors are getting 5% return this year, they want 10% next year, then 15% the following year. That doesn't really work, eventually the return maxes out if you expect to have a sustainable business plan.
TWC under invested in core cuz they spent it all on the dodgers and lakers
If TWC woulda spent on infrastructure what they paid out to the dodgers and lakers (I dont live in CA), customers like me wouldnt be leaving. I have used Comcast, Fios and other cablecos. Fios was THE best and I didnt mind paying for it. It worked! They underpromise and overdeliver. TWC has been nothing but a headache since I moved into its area and my other option is ATT U-Verse. Ya, no thx. I've got Tivos so they are the only game. But they never invested in the background services so I rarely get all the channels I pay for because the cablecards servers are forever going out of sync. (proven that functionality to onsite techs) Plus when they use a cable card from their own set top boxes...in my Tivo. It runs perfect. This is definitely a case of a CEO padding his paycheck by hitting the investors numbers then actually trying.
Let's not forget the expectations for docsis 3.1 coming later next year. With all the price hikes, there needs to be more value or consumers will cut the services they buy. The typical triple play now costs on average ABOVE $110 when all is said & done with taxes, fees & rental equipment-- and more likely approaching $200. With that in mind, where is the 100/100 megabits to go along with with?!? Until these days arrive, many would rather spend $60 or less on just internet to spite the cable companies & telcos for not doing better and it shows in their financial reporting (which means they can't hide it anymore).
2013-Dec-25 8:21 am: ·
IowaCowboy Want to go back to Iowa Premium join:2010-10-16 Springfield, MA
It took them forever to upgrade their markets to DOCSIS 3.0 while Comcast was hard at work upgrading.
They took advantage of their Bell System style monopoly to care less about their offerings. But video does have competition from satellite.
While I think Time Warner has better customer support (their call center is actually in Maine), Comcast has better products (Motorola set-tops, aggressive network upgrades, etc). -- I've experienced ImOn (when they were McLeod USA), Mediacom, Comcast, and Time Warner and I currently have DirecTV. They are much better than broadcast TV.
I have not and will not cut the cord.
2013-Dec-23 6:28 pm: ·
Steve Mehs Gun Control Is Using A Steady Hand Premium join:2005-07-16 kudos:1
Re: DOCSIS 3.0
Time Warner has many call centers all around the country, not just Maine. Tech Support and billing is handled in Rochester, Albany is sales, Buffalo is Intelligent Home, Signature Home is Charlotte. Just because you have an issue and live in Maine does not mean you'll be connected to a CSR in Maine. You'll be connected to a CSR at a call center that handles the type of issues you are having.
What exactly makes Motorola set top boxes better then Cisco or Samsung? -- 4/17/13 - A Beautiful Day For Freedom, Thank You United States Senate! Message to Anti-Gun Liberals: HA HA! Hussein Obama 0, American Public 1 Repeal 0bamacare Now!/Marriage = Man + Woman
We can sit back and arm-chair quarterback what we think TWC has, hasn't, and should have done regarding upgrades. But does anybody find the timing and purpose of this "reuters" article a little suspicious? Citing only a single Brean Capital analyst?
This reeks of investors trying to play sides.
First John Malone wants to buy TWC who says they're not interested in being acquired by a smaller cable company who got out of bankruptcy in 2009 (BTW, how'd they do on their own upgrades?).
Then Johnny offers less than $140 per share in a very leveraged offer at a much lower Ebitda than the Charter / Cablevision deal. Investors and analysis laugh at that and John gets his feelings hurt.
This analyst (Todd Mitchell) is glossing over a lot of facts and didn't do any research. Did TWC loose video subscribers faster than Comcast? Yes, and you can point squarely to the 3Q results when the CBS feud happened. That had nothing to do with "network upgrades" like the headline says.