Media giant's new CEO has some areas to work on
NEW YORK -- That would have been unthinkable a few years ago: Parsons has long believed cable could come to dominate the digital media and grow through sales of phone and high-speed Internet subscriptions, and TV services including video on demand and DVRs.
But investors have cooled on cable as growth in broadband subscriptions slowed and competition from satellite and phone companies, especially Verizon, intensified. Phone companies alone might poach 10% of Time Warner's basic cable subscribers by the end of 2010, Goldman Sachs estimates.
The fear is that to remain competitive cable operators will have to put a lid on rate increases, while spending heavily on equipment needed to keep pace with rivals that plan to offer more than 100 HDTV channels as the USA switches from analog to digital TV.
The value of shares in Time Warner Cable has fallen 33% since it went public in January. The stock closed Monday at $27.35, up 24 cents.
The parent company also felt that chill wind.
Time Warner "tends to trade like a cable stock even though it's less than 40% of the company's assets," says Bernstein Research analyst Michael Nathanson. "They're being whipsawed back and forth by cable, and there's another side of the company that pretty much gets ignored."
• Online. Bewkes would please a lot of investors if he could stop the bleeding at AOL.
After watching AOL's online service steadily lose its dial-up subscribers, Time Warner hoped to turn the unit around with ad sales at AOL's public website. But increasing ad sales have yet to outweigh revenue losses on the subscription side.
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