Basic Momentum Should Build for Cable
By Mike Farrell -- Multichannel News, 4/9/2006 4:47:00 PM
Atlanta -- Cablevision Systems Corp. chief financial officer Michael Huseby said that despite low market valuations and fears that telcos and satellite operators will take away its business, the cable industry is at an inflection point to begin to recapture basic subscribers.
Huseby, whose Bethpage, N.Y.-based cable company has some of the highest subscriber growth in the industry -- about 2% in 2005 -- said that could end up being the norm in the next few years.
Speaking on a panel with three other CFOs from cable operators at the National Show here Sunday, Huseby said Cablevision has had seven consecutive quarters of basic-subscriber growth.
“I think that won’t be the exception six quarters from now, that will be the norm,” he added. “As an industry, you’re starting to see that.”
Huseby pointed to continued strong growth in new services -- Cablevision’s voice penetration at 16% is the highest among operators, and the MSO is adding customers at a rate of 1% per month.
He added that many pundits expected high-speed-Internet service several years ago to plateau at 12%-13% penetration. Cablevision had 38% high-speed-data penetration of homes passed at the end of 2005 and 50% of homes with PCs.
Time Warner Cable CFO John Martin added that he sees strong growth ahead for the triple play. According to Martin, only 40% of Time Warner Cable customers take at least two products from the company.
“That means 60% of our customers today are still only single-product customers,” Martin said. “We think that provides a tremendous runway for us to really, really grow.”
Comcast Corp. executive vice president, co-CFO and treasurer John Alchin added that while Comcast has been late to the phone game -- it expects to add about 1 million phone subscribers this year -- it has been aggressive on high-speed-data and video-on-demand services.
Alchin said telephone companies have commoditized their high-speed brand, while cable companies reinforced their offerings by enhancing speeds, which allowed them to add applications to the service. As an example, Alchin added that Comcast has 38,000-40,000 video clips available through its broadband portal, which its customers are accessing at a rate of 30 million-40 million streams per month. Last year, its customers streamed 400 million video clips.
Alchin reminded the audience that Comcast has added 1.5 million-1.7 million high-speed-data customers each year for the past three years, while average revenue per customer has slightly increased to around $42-$43 per month, indicating that the impact from telco digital-subscriber-line offerings has been minimal.
“We’ve got huge upside from here and, I think, tremendous pricing power as we go up from here,” he said.
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