Time Warner Cable Inc. (TWC), the second-largest cable operator in the U.S., plans to offer its latest electronic device called Slingbox, which is manufactured by Sling Media Inc. at a subsidized rate.
The new device, once connected to the set-top box allows subscribers to watch their favorite TV programs on any electronic gadgets, whether it’s PC, tablet or smartphones from anywhere and anytime.
Slingbox is priced at $300 but will be available to the subscribers of Time Warner Cable at a subsidized rate of $99 per month. The offer comes along with Time Warner Cable’s popular Wideband Internet service, supported by Docsis 3.0, allowing download speed of up to 50 Mbps. Such a move will also allow the company to upgrade its customer base.
With the growing popularity of anywhere TV service, such devices have become massively popular These provide subscribers with more options to choose in terms of devices to view their favorite TV programs. Moreover, with the roll out of LTE services, demand for online video streaming is further increasing. Thus, most cable and television service providers have started offering such value-added service facility to its clients.
Despite strong fundamentals, healthy demand for premium cable services and strong share buy back program, 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 (NFLX) and Hulu, is expected to hurt profitability going forward.
We, thus, maintain our long-term Neutral recommendation for Time Warner Cable Inc. Currently, Time Warner Cable Inc. has a Zacks#2 Rank, implying a short-term Buy rating on the stock.
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