Cable Operators

Mediacom Cuts Sub Losses; 4Q Sluggish

2/22/2005 5:30 AM Eastern

Mediacom Communications Corp. reported mixed results for the fourth quarter and full year, paring down its basic-subscriber losses but showing sluggish revenue and cash-flow growth.

Mediacom lost about 3,000 basic subscribers in the quarter, its lowest quarterly decline in two years. Revenue rose 2% in the period to $265 million and cash flow was flat at $102.5 million.

For the year, revenue rose 5.2% to $1.06 billion and cash flow increased 2% to $413.7 million.

The MSO was encouraged by the basic-subscriber numbers, claiming that it could be an indication that the losses of the past two years are beginning to stabilize.

Mediacom has lost about 131,000 basic subscribers since the first quarter of 2003, mainly due to aggressive local-into-local launches by direct-broadcast satellite service providers in its markets. The operator said about 92% of its markets have local-into-local DBS service.

“This gives us some reason to believe that the worst is behind us with respect to the local-into-local launches by DBS and that customer erosion has stabilized,” Mediacom chief financial officer Mark Stephan said on a conference call with analysts.

Executive vice president of operations John Pascarelli said on the call that the decline in subscriber losses was due mainly to the MSO’s decision to include subscription-video-on-demand service in the price of premium services like Home Box Office.

He added that about 65% of digital homes now have access to VOD and SVOD and that more than one-half of its digital subscribers are watching 10 VOD-type events per month.

That VOD and SVOD penetration translated into stronger digital-customer growth -- Mediacom added about 14,000 digital subscribers during the quarter. High-speed-data customers increased by 17,000 during the period.

Mediacom also plans to begin rolling out its own telephony product, “Mediacom Digital Phone,” during the second quarter. The Middletown, N.Y.-based MSO said the service will be available to 70% of its households by the second quarter of 2006.

The company issued its 2005 year-end guidance, expecting revenue for the full year to be $1.09 billion-$1.11 billion and cash flow to range between $415 million-$425 million.

Capital expenditures for the year will be slightly up from the $181.4 million spent during 2004 -- to between $200 million-$210 million -- due to upgrades to its Florida properties as a result of the hurricanes in the region last year and to the telephony rollout.

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