Time Warner Cable Inc., which is awaiting regulatory approval to merge with Comcast Corp., missed analysts' profit estimates as TV programming costs rose and the company offered more promotions to lure subscribers.
Fourth-quarter net income rose to $554 million, or $1.95 a share, from $540 million, or $1.89, a year earlier.
Excluding some items, earnings rose to $2.03 a share, falling short of the $2.09 average of analysts' estimates compiled by Bloomberg. Sales increased 3.8% to $5.79 billion, the New York company said Thursday. Analysts projected revenue of $5.81 billion.
As the total number of Americans paying for TV declines, Time Warner Cable has focused on offering cheaper bundles of cable, Internet and phone service to keep subscribers and lure new ones. The company has faced rising costs for sports and broadcast channels, while investing in improving its broadband network as younger viewers increasingly watch shows on the Web instead of paying for traditional cable.
"The big drag remains the rate of programming rate increases," said Craig Moffett, an analyst at MoffettNathanson. Efforts to draw new customers also reduced Time Warner Cable's profit, he said.
Programming and content expenses climbed 7.1% to $1.3 billion in the quarter, as media companies demand higher fees for the right to air their sports and broadcast channels.
The falling number of Americans paying for TV partly inspired Comcast's proposed $45.2-billion takeover of Time Warner Cable. The deal could give the combined companies scale to help invest in their network and combat rising expenses.
Although Time Warner Cable reiterated that it expects the deal to close soon, the companies extended the expiration date of their merger agreement by six months to August, according to a regulatory filing Thursday.
The extension is "no surprise" and "purely procedural," according to James Ratcliffe, an analyst at Buckingham Research Group. He said it was very likely that the deal would be completed.
The merger is still under regulatory review. The Federal Communications Commission and Justice Department have been vetting the deal since it was announced almost a year ago and have delayed their decisions several times.
Time Warner Cable shares fell $1.33, or almost 1%, to $137.77. The stock is down 9.4% this month.