Time Warner Announces Changes: Do You Buy In?
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You may have noticed the ongoing battle between television providers. If you haven’t, you probably don’t have one.
Cable and satellite television providers have been dueling it out in TV commercials, saying their service is better, their prices are lower, they offer better service. As of late, cable has been losing: subscribers by the millions have been flocking away from cable for “better” alternatives. Cable is falling victim to the usual knocks—bills that are too high, slow box services, unhappiness with contracts, and slow internet speeds.
But Time Warner Cable (NYSE: TWC) is taking a stand, introducing an offer that’s impossible to resist. Or, at least, the company thinks it is.
The cable giant is aiming to reclaim their lost customers, offering a new promotion called “The Better Guarantee,” in which they claim that customers are guaranteed to witness a much better service experience if they switch back to Time Warner. The ads relinquish that TWC knows they may not have fully lived up to expectations in the past, but that they promise they have become better.
“We, as a company, are fundamentally different and better than we were a few years ago when these upstart competitors (Verizon FiOS, AT&T U-Verse) started coming in,” acknowledged Jeffrey Hirsch, the chief marketing officer for Time Warner’s residential services division. “That promise of new isn’t such a great promise, and people are starting to come back to Time Warner,” Hirsch said. The new ads target Verizon specifically, calling them out for not following through on promised monthly savings.
The campaign comes just before the release of TWC’s announcement of their fourth quarter numbers, which could reveal further losses of television service subscribers. Jefferies and Company, analysts of the industry, published a forecast predicting that TWC would lose about 140,000 subscribers in the quarter.
As a part of the campaign, Time Warner will be offering a 30-day money back guarantee. Furthermore, they promise to decrease their 4-hour service window, a common cable-complaint, to two hours. TWC plans to use television ads, as well as social networking sites, to advertise the guarantee.
The deal comes at a time when TWC, despite its stock being up 138% since the beginning of 2010 and a 40% increase in dividend amounts, has lost hundreds of thousands of subscribers in the same time frame.
Time Warner isn’t the only company under pressure. Comcast (NASDAQ: CMCSA) began a new phase of marketing under its consumer services division, Xfinity, last summer. Both major cable companies have also shifted large portions of their investments to ensure that their technology matches—or exceeds—that of its competitors, meaning that they are determined to offer faster internet speeds and more television options. Comcast is up 126% in the same two year span, just barely trailing TWC’s impressive stock results.
While the cable companies consistently pull in negative feedback ratings, some television services providers rank above industry average in consumer satisfaction, including DirecTV and Dish Network, as well as AT&T’s (NYSE: T) U-Verse service, which has seen recent service outages and lags that have sent its approval slightly down. However, AT&T gained 192,000 U-Verse TV customers in the fourth quarter, surpassing 8 million total subscribers, and now accounting for 61 percent of AT&T wireline consumer revenue.
However, despite historically poor consumer satisfaction ratings, Time Warner’s approval score climbed 4 percentage points, the best change of any television provider, hinting that maybe there is hope.
So far, Mr. Hirsch is confident that the guarantee can help rake in lost customers. Are you? Do you think that the guarantee is enough to bring back Time Warner’s subscriber amount back to where it once way? The recent agreement to broadcast LA Dodgers games will certainly help, even if the results of the campaign aren’t as strong as TWC hopes.
Michael Nolan has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!