Insight Pulls Plug on Comcast Indiana Deal
By Mike Farrell -- Multichannel News, 7/30/2004 1:22:00 PM
Insight Communications Co. Inc. announced that it has terminated a management agreement with Comcast Corp. for 89,000 subscribers in Indiana, but CEO Michael Willner stressed that it was not an indication that the two companies would sever a larger deal.
The agreement was struck in 2000 with AT&T Broadband (which Comcast acquired in November 2002), under which Insight received a management fee equal to 5% of gross revenue and was reimbursed for expenses for systems in Indiana with 89,400 customers. Effective July 31, that agreement will terminate.
On a conference call with analyst discussing Insight’s second-quarter results, Willner said the MSO considered buying the systems from Comcast, but it just became too complicated.
He stressed that this was not a sign that Insight will opt out of a larger partnership with Comcast -- a 50-50 partnership called Insight Midwest, which includes most of Insight’s 1.28 million subscribers. Also originally struck with AT&T Broadband, the Insight Midwest partnership does not expire until 2011, but it can be renegotiated beginning in December 2005.
“There have been no conversations about what happens in ’05,” Willner said. “There are all kinds of possibilities and probabilities. I don’t think anybody should make any assumptions about anything. If a process started in December of ‘05, under the partnership agreement, it could take a number of years to be completed.”
For the quarter, Insight reported revenue growth of 12% (to $250 million) and operating income before depreciation and amortization was up 13% to $107 million.
The MSO lost about 15,500 basic subscribers during the period, but it added 16,000 high-speed-data customers and 1,500 telephone customers. Digital subscribers were down by about 200 in the second quarter.
Insight shares fell 35 cents each (3.8%) Friday, closing at $8.80 per share.
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