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 15.2 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 April 2015, rival Comcast dropped its $45 billion bid to acquire TWC because of regulatory hurdles. A month after that door closed another opened. TWC accepted a $55 billion offer from Charter Communications.
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 more than 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.
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 2014 TWC served approximately 10.8 million residential video subscribers, 11.7 million residential high-speed data subscribers, 5.3 million residential voice subscribers and 85,000 Intelligent Home customers. The Company spent about $684 million on advertising in 2014 compared to $676 million in 2013.
The company has seen strong revenue growth over the last decade. Sales in 2014 rose 3% to $22.81 billion on higher business service revenue from the inclusion of revenue from DukeNet (an acquisition) as well as and growth in high-speed data and voice subscribers. Election year advertising drove advertising revenue higher. The residential services segment saw an increase in high-speed data revenue, which was partly offset by decreases in video and voice revenue.
The higher revenue translated into a 4% rise in net income, to $2.03 billion in 2014. Cash flow from operations has been steady over the past several years; in 2014 it rose $597 million to $6.3 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 nascent 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.