Deborah Yao, THE ASSOCIATED PRESS

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Time Warner Cable Inc., America's second biggest cable TV operator, said Thursday its profit fell 11 per cent in the third quarter, weighed down by heftier interest expenses after piling on debt to separate from its parent, Time Warner Inc.

Revenue also grew at a slower pace in the quarter, as a weak housing market and the sluggish economy meant it was signing up fewer new subscribers while existing customers were not ordering as many premium services. When people move into a new home, they often sign up for cable service.

"Housing trends have not materially rebounded, with high foreclosure rates and home vacancy rates at their highest levels since at least 1966," CEO Glenn Britt said in a conference call with analysts. "Unemployment continues to increase, and of course we're also facing increased competition."

Time Warner Cable said it earned US$268 million, or 76 cents per share, in the three months ended Sept. 30 compared with $301 million, or 92 cents a share, a year ago. Operating income rose by 5 per cent to $828 million.

Revenue rose 3.7 per cent to $4.5 billion from $4.34 billion a year earlier. Earnings were a penny a share shy of analysts' average estimate but revenue topped their forecast of $4.47 billion, according to Thomson Reuters.

Time Warner Cable's revenue growth slowed, up 3.6 per cent in the quarter, down from 8.5 per cent in the same quarter last year. It was a tad better than cable industry leader Comcast Corp., which reported earnings Wednesday, but not as good as Cablevision Systems Corp., whose Monday earnings report didn't show much sign of the sluggish economy's bite.

However, the cable TV industry as a whole is more resilient than other industries because while people might cut back on pay-per-view, they're reluctant to give up their TV. Also, cable's bundled video, Internet and phone service package usually is cheaper than buying the services a la carte.

Time Warner Cable also is a distracted by its net debt, up 75 per cent to $22 billion at the end of the quarter after paying a $10.9 million special dividend to Time Warner Inc. and other shareholders in March. The company is trying to pay it back as quickly as possible.

The debt load affected free cash flow, a critical measure of liquidity for typically debt-laden cable companies. It rose by 19 per cent to $1.5 billion in the first nine months of the year, compared with an increase of 64 per cent last year, when net debt was $13 billion.

In the quarter, Time Warner Cable added 117,000 new lines of service encompassing video, Internet and phone services from the second quarter. That's less than the 522,000 it added sequentially in the third quarter of 2008.

The average monthly revenue per customer was more than $98 for video, phone and Internet, up 1.4 per cent in part due to price increases.

Advertising revenue also remained soft, especially ad spending from auto despite the wildly popular "Cash for Clunkers" program.

Shares of Time Warner Cable, based in New York, rose 55 cents to $40.60 in morning trading. The cable operator serves 14.6 million customers.