Here’s How Time Warner Cable Avoided Cord-Cutting

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In May, the Nielsen Report announced that “cord-cutting” was a reality, estimating that the number of homes in the United States subscribing to a pay-TV service fell by 1.5 million, or 1.5 percent, last year. However, Time Warner Cable’s (NYSE:TWC) most recent earnings report revealed that cord-cutting had not caused a great deal of deal of damage to the pay-TV industry or its business over the past quarter, although penetration rates fell slightly.

Time Warner Cable, a provider of video, high-speed data, and voice services, reported its third-quarter results before Monday’s open, revealing that video revenue rose 3.7 percent to $2.72 billion and high-speed data revenue rose 14.3 percent to $1.28 billion.

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While the company’s results were softer than Barrington Research had expected, the firm reaffirmed its Outperform rating. Subsequently, the firm raised its 2013 target value from $105 to $130.

For the three-month period, Time Warner reported earnings of $5.363 million, or $1.41 per share, an increase of 9.2 percent from the year-ago quarter. The result exceeded Barrington’s estimated earnings per share of $1.38.

Growth in high-speed data continued to be the company’s most important driver, with residential subscriptions growing 10.9 percent in the third quarter and subscriptions in the business service segment increasing 18.9 percent. Furthermore, the company’s Business Service segment grew by more than 20 percent for the 10th consecutive quarter, with revenue increasing 27.4 percent year-over-year.

With positive growth for the quarter in both video and data services, Barrington Research noted that competition had not hampered the company’s results. In the firm’s research note on Time Warner, it commented, “We feel competitive pressures deriving from the availability of new programming services, like Netflix (NASDAQ:NFLX), Hulu (NASDAQ:CMCSA), Amazon (NASDAQ:AMZN), and new distributors including Verizon Communications’ (NYSE:VZ) FiOS and U-Verse, from AT&T (NYSE:T) could begin to lessen if not reverse somewhat.”

Shares in Time Warner are trading up 1.03 percent at $94.21 in early trading on Thursday.

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