Time Warner Cable Inc.
(
TWC
), the second largest cable MSO in the U.S., recently announced
that it has included HBO GO and MAX GO,an online video service
provider of Home Box Office Inc. (HBO). The inclusion of both the
streaming services will improve the service quality of Time Warner
Cable's subscribers.
Time Warner Cable's customers who will subscribe for HBO or
Cinemax channel networks will enjoy free and unlimited access to
the online video services of HBO GO and MAX GO.
With the growing popularity of tablets and smartphones coupled
with the deployment of LTE networks, Time Warner Cable's customers,
who have HBO or Cinemax channel network subscriptions, can easily
watch all their favorite TV series like Game Of Thrones, True Blood
and many movies and documentaries anytime and from anywhere.
Moreover, such service offerings will also counter the threat
arising from online video streaming companies like
Netflix, Inc
(
NFLX
) and Hulu, hence improving the company's churn rate.
On April 29, 2011, HBO GO was launched on iPhone, iPad and
Android applications, and reported over three million downloads by
the end of June 2011. Most of the cable TV companies have already
included this new service facility with Time Warner Cable being the
latest to jump into this bandwagon.
Looking at the growing popularity of online TV viewers HBO and
Cinemax, both part of
Time Warner Inc
. (
TWX
), has also started offering video-on-demand service to its
subscribers.
Solidfree cash flow and healthy demand for premium cable
services along with strong share buyback program will drive the
company's top-line and bottom-line growth.
However, huge debt coupled with a rise in programming cost and
continuous loss of subscribers will act as headwinds for the
company going forward. Moreover, stiff competition from formidable
rivals like
Comcast
(
CMCSA
) and
AT&T
's (
T
) U-Verse network as well as the newly emerged online video
streaming companies like Netflix, Inc and Hulu, is expected to hurt
profitability going forward.
We maintain our long-term Neutral recommendation on Time Warner
Cable. Currently, Time Warner Cable has a Zacks #3 Rank, implying a
short-term Hold rating.
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