Time Warner Cable ekes out gains

Time Warner Cable Inc. continued to lose pay-TV customers in Los Angeles and Dallas during the first quarter as it struggled to recover from botched efforts to integrate other cable systems it acquired last summer.

But sales gains in so-called triple-play packages which include TV, Internet and phone service, helped the nation’s second-largest cable TV company post double-digit increases in revenue and profit.

Time Warner lost 20,000 basic TV customers, 17,000 of which were in the two major markets. But that was more than offset by 66,000 new subscribers elsewhere.

The losses in Los Angeles and Dallas also slowed considerably from the nearly 42,000 who quit in the final three months of last year. That’s when Time Warner began combining TV and Internet operations it acquired from Comcast Corp. and Adelphia Communications Corp.

“We stumbled initially in Los Angeles by trying to change too much too fast,” Chief Executive Glenn A. Britt said. “But once we realized this, we moved very quickly to remedy the situation.”

The company, which went public in the first quarter, reported that net income rose 16.5% to $276 million, or 28 cents a share, from $237 million, or 23 cents, in last year’s first quarter. Revenue rose 62.5% to $3.9 billion from $2.4 billion.

The numbers were boosted by the last summer’s acquisition of Comcast and Adelphia properties. In the deal, Time Warner and Comcast acquired bankrupt Adelphia, then swapped properties to give each other dominant positions in major metropolitan areas. Stamford, Conn.-based Time Warner ended up with 1.9 million customers throughout Southern California, making it the area’s major cable firm.

Sanford Bernstein analyst Craig Moffett said Time Warner’s growth was spectacular despite weak advertising revenue. He said expectations weren’t high because of the company’s problems in Los Angeles.

Customers complained about losing e-mail, Internet and TV service and said customer service agents kept them on hold for hours. The fiasco cost Roger Keating his job as head of Time Warner’s Greater Los Angeles operation.

“Today’s results should also put those integration concerns into better perspective,” Moffett said in a note to investors. “Even continued subscriber losses in acquired systems weren’t enough to restrain overall growth, which beat expectations on all important metrics.”

During the first quarter, Time Warner also launched its wireless service with Sprint Nextel Corp. in five cities. The mobile-phone venture, which includes Comcast and two other cable firms, is being marketed jointly under the brand name Pivot.

Time Warner Cable shares rose 73 cents to $36.95.

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james.granelli@latimes.com