Time Warner Cable Eyes Softening Market8 Dec, 2008 By: Erik Gruenwedel
The current economic slowdown remains volatile and unpredictable, said Glenn Britt, president and CEO of Time Warner Cable, even though cable television has historically been recession-proof due to being a subscription-based business instead of an ad-supported business.
“I can’t remember an environment like this in my career,” Britt said during an investor conference Dec. 8. “It seems to change every week.”
He said that if consumers continue to lose their homes and the homes remain unoccupied, it would have an impact on the cable business.
“We are not going to have customers,” Britt said.
The CEO said that subscriber growth significantly slowed beginning in October, which resulted in “softness” in demand for premium video services such as video-on-demand and digital video recorders. He said DVR use was down about 40% from the same period last year.
“People just sort of closed their pocket books, and everything dramatically changed,” Britt said. He said consumers still want to watch TV and still need cable, but have looked for ways to “cut back around the edges.”
He said despite the downturn, cable, while not a necessity, remained important to people and part of their everyday lifestyles.
“They are not going to disconnect quickly or easily from that,” Britt said. “History would say people watch more TV during bad times. Wherever the broad economy goes, we will do better than most businesses.”
He said businesses dependent on selling physical product off a shelf or showroom floor have seen sales decline because people aren’t buying. With cable-delivered broadband now reaching 60% penetration in the country and becoming integral to the way consumers conduct their lives, Britt said cable has the ability to ride out the storm.
“It may be even more important than TV,” he said. “That is going to make us perform better than most businesses.”
Separately, Time Warner Cable is slated to split from parent Time Warner Inc. in the first quarter of 2009, which includes a $10.9 billion one-time dividend to TW shareholders and the assumption of about $9 billion in debt through the transaction.