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Time Warner Cable cuts video subscriber losses, adds Internet clients

The Time Warner Cable logo is displayed on the back of a van in New York February 13, 2014. REUTERS/Joshua Lott
The Time Warner Cable logo is displayed on the back of a van in New York February 13, 2014. REUTERS/Joshua Lott

By Liana B. Baker

NEW YORK (Reuters) - Time Warner Cable Inc lost fewer subscribers than expected and posted healthier results for its residential business, a sign that the turnaround plan it unveiled early this year may be starting to work.

Reporting results for the first quarter, the company said on Thursday it lost 34,000 video subscribers on a net basis, fewer than the 77,300 Wall Street analysts were expecting.

It also added 269,000 Internet subscribers - the most since the first quarter of 2008. Analysts had expected the company to add 179,300 subscribers, according to StreetAccount.

The company, which agreed to be acquired by Comcast Corp for $45.2 billion, is coming off several quarters where it shed hundreds of thousands of video subscribers.

It earlier reported it lost 217,000 video subscribers in the fourth quarter of last year, which was an improvement from the third quarter when it lost more than 300,000 subscribers.

In January, the company said it would increase annual capital expenditures to $3.7 billion to $3.8 billion over the next three years, which should allow the company to improve its cable systems, invest in infrastructure and replace older equipment.

Most cable companies have been shedding video subscribers for the past few years, losing them to satellite and telecom rivals as well as newer Web-based entrants such as Netflix Inc

.

"Optimists will argue with some justification that there is nothing here so dire that time, or Comcast, can't fix," said MoffettNathanson Research analyst Craig Moffett.

Comcast said on Tuesday it added a better-than-expected 24,000 video subscribers in the quarter as well as 383,000 Internet subscribers.

Regarding the Comcast deal, Time Warner CEO Rob Marcus said "the regulatory approval process is going very much as planned and the integration planning process is going even better than expected."

Marcus also said the company will have to look at "new business models ... resulting from anything the FCC might do."

U.S. Federal Communications Chairman Tom Wheeler is proposing new rules that could give broadband providers to strike "commercially reasonable deals" with media and content companies to deliver traffic to users faster.

Analysts say this could potentially be a windfall for companies that provide Internet service such as Time Warner Cable.

Barclays analyst Kannan Venkateshwar said in a research note that "tiered broadband pricing at both ends of the broadband pipe could become real sooner than we expected" which could generate additional revenues for Internet service providers.

Time Warner Cable's quarterly profit jumped 19.5 percent to $479 million, or $1.70 per share, in the first quarter ended March 31.

Excluding items, earnings were $1.78 per share, topping the analysts' estimate of $1.68 per share, according to Thomson Reuters I/B/E/S.

Revenue rose 2 percent to $5.58 billion. Analysts were expecting $5.64 billion.

Time Warner Cable shares rose 0.3 percent to $40.25 on Thursday.

(Reporting by Liana B. Baker, Aurindom Mukherjee and Soham Chatterjee; Editing by Joyjeet Das, Saumyadeb Chakrabarty and W Simon)

(Additional reportng by Aurindom Mukherjee and Soham Chatterjeea, Editing by Joyjeet Das, Saumyadeb Chakrabarty and W Simon)

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