Time Warner Cable Inc. (TWC - Analyst Report) has decided to restructure its bundled offerings for new subscribers. The second largest cable MSO (multi-service operator) in the U.S. is promoting two revamped packages. The first one is the Starter TV package, which will be available for $19.99 per month for the first year and will include over 20 TV channels including popular networks and local TV channels.
The second one is Starter TV with HBO, which will be available for $29.99 per month for the first year and will include the same channels as Starter TV, but together with access to HBO networks.
One of these offerings includes the price of the set-top box and taxes. Last October, Comcast Corp. (CMCSA - Analyst Report), the largest cable MSO in the U.S., began its offer of a new package called “Blast Plus”.
This package offers local channels, video-on-demand, streampix, popular networks like CNN, A&E and Comedy Central together with HBO and HBO Go. Blast Plus is available for $49.99 for the first six months.
We believe the restructuring of the bundled service is an attempt by Time Warner Cable to restrict its huge TV subscriber losses. In Aug 2013, the company faced a month long blackout of CBS network over programming contract renewal disputes with CBS Corp. (CBS - Analyst Report).
In the third quarter of 2013, Time Warner Cable lost a whopping 306,000 residential pay-TV subscribers primarily due to the CBS network blackout.
A recent analysis by Leichtman Research Group Inc. revealed that the cable TV operators in the U.S. are gradually losing hold on the pay-TV market. Internal dynamics of the pay-TV markets are slowly shifting toward fiber-based video offerings of large telecom and satellite TV operators.
Leichtman stated that the top nine U.S. cable TV operators suffered a net loss of 600,643 customers in the third quarter of 2013. This was the cable TV industry’s biggest net loss after the third quarter of 2010.
Recently, the Wall Street Journal reported that cable MSO Charter Communications Inc. (CHTR - Analyst Report) is trying hard to reach an agreement with several banks to raise $25 billion in order to acquire Time Warner Cable.
Industry resources also reported that Comcast may join hands with Charter or may offer an individual bid for Time Warner Cable. The stock currently carriers a Zacks Rank #3 (Hold).