Holdco, LLC

  • Overview

Time Warner Cable (TWC) makes coaxial quiver. The company is the #2 US cable company, after Comcast, with operations in 28 states. Its core service areas are located in New York, the Midwest, Texas, the Carolinas, and southern California. It serves more than 15 million mostly residential customers (about half a million business customers) with video, high-speed data (primarily through ISP brand Road Runner), and voice offerings (in conjunction with Sprint Nextel). More than 60% of the company's customers subscribe to two or more of TWC's services, with nearly 30% receiving all three. In February 2014 rival Comcast moved to acquire TWC for some $45 billion in stock.

Change in Company Type

The deal would 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 local news broadcasting stations in New York, Texas, and North Carolina, as well as regional sports networks.

The company's business services, which represent less than 10% of sales, also include networking and transport, outsourced IT services, and cloud services.

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 such as Verizon Wireless.


Financial Analysis

The company has seen strong revenue growth over the last decade. Sales in 2012 rose 9% to $21.4 billion, driven primarily by acquisitions and price increases, which offset an organic decline in residential video subscribers (its largest segment). Its primary growth engine is the residential high-speed data segment, which grew 14% year-over-year. TWC anticipates continued growth in this area.

Net income jumped nearly 30% in 2012 to $2.2 billion, in large part 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.

Strategy

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 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.

Ownership

Former parent Time Warner, which owned about 84% of TWC, spun off the cable division to its shareholders in 2009 as part of a restructuring effort intended to boost Time Warner's overall performance.

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Holdco, LLC


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

STATS


  • Employer Type: Unknown
  • Cfo: Clay Carey
  • Pres: Jeff King
  • Principal Engineer: Chris Roosenraad

Major Office Locations

  • Herndon, VA

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