Holdco, LLC

Time Warner Cable (TWC) makes coaxial quiver. The company is the #2 US cable company, after Comcast, with operations in more than two dozen states across the country. It serves more than 15 million mostly residential customers (about 625,000 business customers) with video, high-speed data (primarily through ISP brand Road Runner), and voice offerings, as well as security and home management. In addition to video, voice, and data, other business services include networking and transport, outsourced IT, and cloud computing. In February 2014 rival Comcast moved to acquire TWC for some $45 billion in stock.

Change in Company Type

Comcast's pending acquisition of TWC will combine the nation’s two largest cable companies, which have been facing stiff competition from less expensive pay TV alternatives such as Netflix, Hulu, and Apple TV. To combat any antitrust concerns, Comcast will divest about 3 million subscribers (which will most likely go to Charter Communications) in order to keep its market share to less than 30%. The two companies say the merger will save some $1.5 billion in operating efficiencies and finally give Comcast access to TWC's hold on the New York City market. If approved, the deal is expected to close by the end of 2014.

Operations

TWC also operates a local news broadcasting station in New York  and two Los Angeles regional sports networks, as well as a news, sports, and entertainment online portal.

The company generates more than 80% of revenue from its residential services; business services and advertising account for about 10% and 5%, respectively.

Geographic Reach

Its core service areas are located in New York, the Midwest, Texas, the Carolinas, and southern California.

Sales and Marketing

TWC markets its products and services via a host of direct channels (online, telemarketing, e-mail marketing, door-to-door sales), as well as through third-party partners and retailers.

Financial Analysis

The company has seen strong revenue growth over the last decade. Sales in 2013 rose 3% to $22.1 billion on a small increase in residential revenue (driven primarily by growth in the number of high-speed data subscribers) and a larger increase (22%) in business services as it claims more customers and higher revenue per customer.

Net income fell nearly 10% in 2013 to $1.9 billion after a spike the previous year because of $500 million in other income as a result of joint venture SpectrumCo's sale of its wireless spectrum and TWC's divestiture of its Clearwire stake. Cash flow from operations has been very steady over the past several years; in 2013 it rose 4% to $5.7 billion.

Strategy

Growth in TWC's residential operations has slowed in recent years as it operates in mature, competitive markets. The company is focused on improving the quality and reliability of its residential products and offering distinguished customer service. TWC expects to see continued strong growth in its business services segment; it predicts revenue of more than $5 billion from those offerings by 2018.

In mid-2012 SpectrumCo - a joint venture between TWC, Comcast, and Bright House Networks  - sold its advanced wireless spectrum licenses to Verizon Wireless. TWC's portion of the proceeds was about $1.1 billion. The agreement gives TWC more avenues into the wireless business, as it includes the option to sell Verizon wireless services and then, after four years, obtain the services wholesale and offer them under a TWC brand. Later that year the company sold its small stake in wireless broadband provider Clearwire for $64 million.

Mergers and Acquisitions

Acquisitions have played their part in TWC's strategy. In 2013 it bolstered its business services wholesale transport offerings with the purchase of DukeNet Communications for about $600 million; the deal adds some 8,700 route miles in the southeastern US to the company's fiber optic network.

In 2011 it paid about $260 million in cash for some of Missouri-based NewWave Communications' cable business, comprising service areas in Kentucky and western Tennessee. The deal expanded TWC's residential subscriber base by 70,000 basic video accounts, 42,000 broadband customers, and 26,000 phone accounts. The following year TWC grabbed a hefty three-quarters of a million subscribers with the $3 billion purchase of Insight Communications, which provides high-speed data, video, and voice services to more than 760,000 subscribers in Indiana, Kentucky, and Ohio. That customer base included a welcome 670,000 video subscribers, helping it back to the 12 million-plus mark for that metric.

To bolster its growing enterprise services business, TWC paid more than $260 million in 2011 for NaviSite, a business network, application, and data hosting services provider. NaviSite operates 10 data centers in the US and the UK. The company's other enterprise services include commercial networking and transport for clients with a need for high-capacity links between offices within a city or between cities.

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Holdco, LLC


13820 Sunrise Valley Dr
Herndon, VA 20171-4659
Phone: 1 (703) 345-2400
www.rr.com

STATS


  • Employer Type: Unknown
  • V Pres: Jim Brueneman
  • Cfo: Clay Carey
  • Pres: Jeff King

Major Office Locations

  • Herndon, VA

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