Time Warner Cable (TWC) helped put cable on the map as one of the early US providers. The company is part of Charter Communications, the #2 US cable company after Comcast. TWC has operations in more than two dozen states across the country. It serves more than 16 million mostly residential customers (about 700,000 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. TWC was acquired by Charter in mid-2016 and will be rebranded Spectrum.
Change in Company Type
The acquisition of TWC as well as Bright House Networks makes Charter Communications one of the largest cable companiesin the US. Cable companies have faced threats from streaming services such as Netflix, Hulu, and Amazon.com. The streaming services reach many subscribers over the networks of the cable providers. TWC brings not only a sizable number of business and residential subscribers to the new company, but access to content as well.
TWC also operates local news broadcasting stations in New York (including New York City), North Carolina, and Texas, regional sports networks, as well as a news, sports, and entertainment online portal.
The company generates about 80% of revenue from its residential services; business services and advertising account for about 15% and 5%, respectively.
Its core service areas are in New York, the Midwest, Texas, the Carolinas, and southern California, but it has operations in nearly 30 states.
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. In 2015 TWC served approximately 10.8 million residential video subscribers, 12.7 million residential high-speed data subscribers, 6.3 million residential voice subscribers and 1.2 million Intelligent Home customers. The company has ramped up its advertising budget, spending about $720 million on advertising n 2015, compared to $684 million in 2014 and $676 million in 2013.
The company has seen strong revenue growth over the last decade. Sales in 2015 rose 4% to $23.7 billion on higher business service revenue from growth in high-speed data, voice subscribers and higher wholesale transport revenue. Residential services revenue rose on an increase in high-speed data subscribers and higher average revenue per subscriber.
Despite the growth in revenue, TWC's's net income dropped 9% to $1.8 billion due to higher programming and content and sales and marketing expenses.
In 2015 cash flow from operations rose about $190 million from 2014 to $6.5 billion.
Growth in TWC's residential operations has slowed in recent years as it operates in mature, competitive markets. The company seeks to extend its services to mobile devices and to non-TV devices to help it retain and gain customers. In a deal with Microsoft, TWC will make its TV app available for the Xbox One video game and entertainment system. Consumers with an Xbox Live account will have access to free and subscription On Demand titles. TWC teamed up with Boingo to provide Passpoint roaming access to their subscribers. Qualified TWC Internet customers and Boingo subscribers can connect to secure WiFi networks at thousands of locations, including 25 high traffic airports in the U.S.
Expanding options for its customers us important as alternatives to cable and satellite TV profilerate. While TWC carries competitors such as Netflix and Hulu via its ISP, such services could eat into TWC's more profitable cable business. Another potential problem for TWC is the Federal Communications Commission's vote to regulate the Internet like a utility. That could prevent TWC and its competitors (or eventual partner, Comcast) from finding sources of revenue in different tiers of service.
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.
Mergers and Acquisitions
Acquisitions have played their part in TWC's strategy. In 2014, the company closed its acquisition of DukeNet Communications. The $600 million purchase bolstered TWC's business services wholesale transport offerings by adding some 8,700 route miles in the southeastern US to the company's fiber optic network.