Cable Deal Collapse Hits Time Warner Subscriber Base

26 June 2002

AOL Time Warner will lose over two million cable TV customers after failing to renew a partnership with Advance/Newhouse Communications.

The latter forged an agreement in 1995 to add its cable systems to Time Warner Cable’s portfolio. That deal expired in March, with Advance/Newhouse (a unit of the Newhouse family’s Advance Publications) subsequently deciding to retrieve financial and operational control of its property.

Accounting for around 2.1m subscribers, the systems are in Tampa Bay, Detroit, Indianapolis, Orlando, Birmingham (Alabama) and Bakersfield (California). Their departure from Time Warner Cable will reduce the division’s customer base from 12.9m to 10.8m – still the second largest cable operator behind AT&T Broadband (13.4m).

The Newhouse family is said to have become worried that the ever-expanding AOL TW could exploit the relationship to benefit its wholly owned units at the expense of those held jointly with its partner.

The systems, which will no longer make a financial contribution to AOL TW, will be rebranded with an as yet undecided title when the new arrangement is completed at the end of 2002.

All that will remain of the partnership is a programming purchasing alliance to extract better deals from providers of cable channels. In addition, the Advance/Newhouse systems will continue to offer subscribers internet services from America Online.

Data sourced from: New York Times; additional content by WARC staff