* Fourth-quarter profit beats analysts' estimates
* Earnings forecasts for 2013 miss Street
* Company says programming costs to rise 10 percent (Recasts, adds background on housing market, Time Warner Cable dropping channels)
Jan 31 (Reuters) - Time Warner Cable Inc added fewer high-speed Internet users than expected in the fourth quarter and it gave a forecast for 2013 earnings growth on Thursday that missed Wall Street estimates, sending its shares down more than 10 percent.
Time Warner Cable, the second-largest U.S. cable operator, and its larger rival Comcast Corp have increasingly relied on Internet services for growth as they continue to lose cable-TV subscribers and grapple with rising programming costs.
But Time Warner added only 75,000 high-speed data subscribers in the fourth quarter, far fewer than the 109,000 subscriber additions analysts had expected, according to StreetAccount. The subscriber numbers and 2013 outlook overshadowed a fourth-quarter profit that topped Wall Street views.
The cable provider said its diluted earnings per share would increase between 10 percent to 15 percent this year from $5.75 in 2012. The growth was below the 19.5 percent rate that analysts on average were expecting, according to Thomson Reuters I/B/E/S.
It also forecast a decline in adjusted earnings growth of between 50 to 100 basis points this year, which Chief Financial Officer Irene Esteves said was partly due to a planned 10 percent increase in programming costs.
"Time Warner Cable shares may be in somewhat of a penalty box until investors become more comfortable that the higher costs are necessary to capture growth opportunities," said ISI analyst Vijay Jayant.
Time Warner Cable shares were trading down 10.4 percent at $90.21.
On Monday, Time Warner said it would carry the new Los Angeles Dodgers channel, outbidding Fox Sports, which held the rights to show Dodgers baseball games for more than a decade.
Media reports estimated the long-term agreement to be worth $7 billion to $8 billion over 20 to 25 years, which the company did not confirm on Thursday. Time Warner has said that signing long-term sports contracts will help it manage costs better by locking in certain rates.
Analysts said it was too early to tell if the deal would be profitable for the company in the long-term.
"People want to know about the cost, the logic behind the regional sports networks and if there are going to be more costs associated with this," said Macquarie analyst Amy Yong said.
Time Warner Cable executives offered only vague details about the deal on a conference call on Thursday. Esteves said the deal would not impact margins in 2013 and would only have an effect on 2014 margins when it launches and begins airing games.
The Dodgers 2013 games will still be on Fox's regional sports network.
"We might have a little bit of startup costs," Esteves said on the call.
It would be the second regional sports network recently launched by Time Warner Cable. In 2011, Time Warner Cable agreed to a $3 billion, 20-year deal to carry Los Angeles Lakers basketball games on its new Time Warner Cable SportsNet channel.
Like its rivals, Time Warner Cable has been a vocal critic of escalating programming costs. In December, it decided to drop an arts-focused cable channel called Ovation and in January it said it would drop the low-rated network Current TV, after it was acquired by Qatar-based Al Jazeera.
Time Warner forecast free cash flow would fall to $2.3 billion this year, compared with $2.55 billion a year ago. ISI analyst Jayant said the outlook for free cash flow missed his estimate of $2.57 billion
Total revenue is expected to grow by 4 percent to 5 percent in 2013, which was in line with Wall Street estimates of 4.5 percent.
In the fourth quarter, Time Warner Cable lost 129,000 video subscribers, compared with an estimated loss of 134,000 subscribers, according to StreetAccount data.
"Net additions across the board for video, Internet and voice were weak. Competition still remains pretty intense and housing still remains inconclusive," Yong, of Macquarie, said.
The cable industry's fortunes are linked to the housing industry, and slow housing formation in the past has led to losses in video subscribers. Recent government data has shown a pickup in U.S. housing demand, with a report last week showing housing starts surged to a four-year high in December.
Average revenue per customer rose to $119.83 from $117.58 in the third quarter. The company raised its regular quarterly dividend by 16 percent to 65 cents per share.
Net income attributable to the company for the fourth quarter fell to $513 million, or $1.68 per share, from $564 million, or $1.75 per share, a year earlier.
Excluding items, the company earned $1.57 per share on 10 percent higher revenue of $5.49 billion.
Analysts expected earnings of $1.55 per share, excluding items, on revenue of $5.5 billion, according to Thomson Reuters I/B/E/S. (Reporting by Liana Baker in New York; Additional reporting by Supantha Mukherjee in Bangalore; Editing by Bernadette Baum and Leslie Adler)