Time Warner Cable’s shares tumbled on news that the nation’s second largest cable operator is likely to report it is losing subscribers tired of high cable prices in a tough economy.  These challenges are fueling press speculation the company is exploring a “broad alliance” with Cox Cable to join forces in an effort to reduce programming costs.

Bloomberg reports growth has slowed across the board at Time Warner.  The cable company blamed the weak economy for most of its troubles, suggesting the lack of new housing developments and home purchasers is responsible for a lot of the negative growth.

“Overall, I would say that the subscriber environment is very, very weak,” Chief Financial Officer Rob Marcus told investors at a Bank of America Corp. conference in Newport Beach, California. “We’re being negatively affected by very high rates of unemployment, high vacancy rates, both at the rental and the owned home levels, and really anemic new home formation.”

Growth has slowed across all Time Warner Cable’s businesses and because of that the company may see a loss in total customers, or what it calls primary service units, Marcus said.

Last quarter, the U.S. pay-TV industry lost basic-cable subscribers for the first time ever, according to research firm SNL Kagan.

Despite subscriber losses, Marcus calmed Wall Street reminding them the company expects to meet expectations for 20 percent growth in adjusted operating income thanks to a series of revenue-enhancing rate increases underway this year and declining costs in some areas of the business.

Reuters reported this week that Time Warner Cable was in the early stages of a discussion about a potential system swap affecting southern California that could blossom into a “broad alliance” on programming negotiations and potentially even a Time Warner buyout of Cox’s cable systems nationwide.

The Cox systems rumored to be at issue serve Irvine and San Diego and smaller properties in Santa Barbara and Rancho Palos Verdes.  Light Reading speculated Time Warner Cable wants Cox’s Irvine system to increase the size of its footprint in Orange County and Cox would get Time Warner’s San Diego system.

Reuters speculated Time Warner Cable would also negotiate programming carriage contracts on behalf of Cox, just as they currently do with Bright House Networks.  A combination of all three systems could deliver programmers carriage commitments for more than 20 million subscribers across all three systems.  That is still a few million short of Comcast, but easily worth significant volume discounts on programming.

A few industry reports shared rumors Time Warner Cable would eventually buy out the Cox family, which privately owns Cox Cable, and combine those cable properties under the Time Warner Cable name.

But in today’s political climate, and concerns about market power and concentration, such a combination would likely face considerable scrutiny from regulators.