Cable Unit Boosts Time Warner’s Earnings

Time Warner Cable reported positive second-quarter earnings (PDF) this morning that fell 26 percent but excluding onetime charges, beat Wall Street’s expectations, and said it would split AOL’s dial-up Internet and advertising businesses into two divisions in 2009. Its earnings beat expectations largely because of gains in its film and its cable and networks division, which will also be spun out into its own company by the end of the year.

High-speed data revenue rose 12 percent to $1 billion, thanks to the company adding 201,000 broadband subscribers to bring its total to 8.1 million. In the second quarter last year it had added 188,000 subscribers, so broadband is up for the year-over-year period, although down from the previous quarter, when it added 304,000 broadband subscribers.

Second-quarter broadband adds may have dropped, but not as much as AT&T or Verizon’s, which only added 46,000 and 54,000 broadband subscribers respectively. Comcast also saw a decrease in net adds from the year before, while Cablevision saw its year-over-year net adds grow by 10 percent.

On the voice side, Time Warner added 251,000 digital phone customers, bringing its total to 3.4 million. In the previous quarter it had added 280,000, and for the second quarter of 2007 added 241,000. The growth in digital phone meant voice revenues were up 39 percent to $397 million. Time Warner’s results validate the shift in customers away from the Baby Bells for broadband and highlight the pressure that cable is placing on voice services as well.