Cable Operators

Ivan, DBS Slash Mediacom Subs

11/08/2004 7:02 AM Eastern

Basic-subscriber losses grew at Mediacom Communications Corp. in the third quarter, driven by Hurricane Ivan-related damage and local-into-local launches by direct-broadcast satellite competitors.

Mediacom lost about 30,000 basic customers in the period, about 8,000 related to damage caused by Hurricane Ivan. The hurricane -- which struck Mediacom markets in Florida and Alabama -- also affected revenue and cash-flow growth.

Third-quarter revenue increased 3.9% to $261 million, and operating income before depreciation and amortization declined 2.6%. Without the impact from the hurricane, Mediacom would have had a revenue increase of 5.1% and OIBDA would have risen 1.3%.

In a conference call with analysts, Mediacom chairman and CEO Rocco Commisso said that although basic-customer losses were lower than in the previous quarter -- when they topped 40,000 -- they were “still unacceptably high.”

But Commisso added that as the level of new local-into-local launches subsides -- about 91% of Mediacom’s footprint has local-into-local DBS service -- Mediacom should be able to win back some of those customers.

Commisso said Mediacom will fight back with a robust bundle of digital video, video-on-demand, digital-video recorders and telephony.

Digital customers increased by 9,000 in the period to 382,000 and high-speed-data subscribers rose 89,000 to 350,000.

Mediacom already offers VOD in about 56% of its digital base, and DVRs are available in almost all of its markets. Telephone service, through a relationship with Sprint Corp., should begin in the first half of 2005.

Commisso said lower-end customers -- those who spend about $40 per month -- made up the bulk of basic-subscriber losses. And Mediacom is targeting those customers with lower-priced digital and data packages.

Mediacom already has a $9.95-per-month low-end digital offering, and it is experimenting with a 56-kilobit-per-second data service aimed at basic-only subscribers.

On the conference call, chief financial officer Mark Stephan said the 56-kbps service is being tested in a handful of markets and no final decision has been made on whether or not to offer it.

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