TIME WARNER CABLE SHIFTS GEARS

Time Warner Cable’s digital penetration is closing in on 40%, or about 4.2 million subscribers, so it’s no wonder the pace of digital additions slowed dramatically in the third quarter. The company appears to be shifting its strategic focus to selling premium products such as DVR-enhanced set-top boxes and SVOD subscriptions. TWC added a total of 131,000 digital subscribers in the third quarter, a number that was below analysts’ forecasts and down from 229,000 in the same period last year. Meanwhile, the pace of DVR additions has quickened — TWC deployed 100,000 DVR set-tops in the third quarter, bringing its total DVR base to a 250,000. Basic subscriber and high-speed data numbers were somewhat weaker than expected. TWC added 190,000 cable modem subs; the company does not expect much of a pickup from that number in the fourth quarter. The MSO added 10,000 basic customers in the quarter, below the 30,000 additions some analysts expected. Time Warner, which dropped the AOL from its name earlier this month, posted a 9% increase in overall operating income, to $2.3 billion, on $10.3 billion in revenue. The slowdown in digital growth at Time Warner Cable hurt shares of Scientific-Atlanta, which last week reported lower-than-expected shipments of Explorer 8000 DVR set-tops.