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Time Warner Cable Beating Expectations, Pays Dividend

The nation's second largest cable company reported results that were better than last year and better than expected, also announcing a quarterly dividend.

Time Warner Cable spun off from Time Warner in March of last year, so ahead of that spin off the year-ago quarter was dragged down by write-down, creating favorable comparisons.

Revenue grew three percent to $4.53 billion, with profit swinging from a loss last year to a 91-cent-per-share gain, three cents per share higher than analyst expectations.

Time Warner Cable's results speak to the importance of the "triple play" — cable, telephone, and broadband Internet. With TWC and its larger rival, Comcast facing more competition for all three services — like Verizon's FIOS and the satellite TV operators — it's crucial the cable players get their subscribers paying for more than just TV. While the company lost over 100,000 video subscribers, it added 120,000 residential Internet subscriptions and 75,000 residential phone subscriptions. All in, it managed to grow its average revenue per customer.

Verizon's FIOS is increasingly popular — steep competition. But another piece of good news—Time Warner Cable picked up nearly three times as many new high speed Internet subscribers than Verizon this past quarter - this despite the fact that Verizon had trounced TWC in this arena a year earlier.

Time Warner's announcement of a dividend wasn't a surprise to Wall Street, but the yield it's paying — 40 cents per share or 3.7 percent — is higher than expected. This move signals to analysts that the company will continue to return cash to shareholders with share repurchases.

Time Warner Cable — an entirely stand-alone company since March — stands in sharp contrast to Comcast, which is in the process of acquiring NBC Universal . The question now for TWC is — will is stick with its plan to focus solely on cable? Will it make acquisitions in the cable space? (Like a Cox or a Cablevision ? So far TWC has given no indication that it's interested in pursuing Comcast's diversification strategy. But with AT&T and Verizon growing their reach into cable's territory, and rumors that they'd make acquisitions of more classic media companies, you've got to wonder where TWC will go next.

Another issue to watch: re-negotiation of transmission fees.

Time Warner Cable and News Corp were in an 11th hour standoff over Fox retransmission fees ahead of their deal's New Year's Eve expiration. These costs are growing, Time Warner Cable says it'll have to pass them along to their customers, and it will have plenty more of these deals to negotiate in coming years.

Questions? Comments? MediaMoney@cnbc.com

  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.