Cable Operators

SEC to Comcast, Cox: How Do You Count Subs?

7/02/2004 9:25 AM Eastern

Comcast Corp. and Cox Communications Inc. both received letters in June from the Securities and Exchange Commission asking questions about how the big cable companies count and report subscribers, the companies confirmed Friday.

Both MSOs received the SEC correspondence at about the same time last month, although spokespersons for both companies could not specify the dates and page lengths of the letter. Both companies could not say when their responses were due.

About two-and-a-half years ago, Cox received a similar letter from the SEC, but it was apparently a random check of Fortune 500 companies, an industry source said.

Evidently, the arrival of the SEC letter didn’t set off alarm bells at Comcast and Cox. One source said the letter was quite general and actually difficult to answer due to its vagueness.

A cable-industry source claimed that the SEC probe was not routine but that based on the questions asked, the agency charged with policing Wall Street did not appear to be launching some kind of fraud investigation.

Other SEC inquiries of MSOs have led to more serious charges, although there is no indication that this would happen with the Comcast and Cox inquiries.

One industry source speculated that because Cox and Comcast are cable’s biggest local-phone players, the SEC decided to lump them in with a broader look at subscriber totals at major phone companies, including AT&T Corp., Verizon Communications,
BellSouth Corp. and SBC Communications Inc.

Comcast is the largest U.S. cable company, with about 21.5 million basic subscribers. Cox is the fourth-largest, with about 6.4 million.

Determining who is a cable subscriber has, in some cases, been more art than science.

In October 2002, the National Cable & Telecommunications Association, in conjunction with 11 cable operators, agreed to standardized definitions of subscribers, defining customer relationships as those who receive at least one service -- either voice, video or data -- without regard to which services customers purchase.

The NCTA also created a standard definition for revenue-generating units as the sum total of all primary analog-video, digital-video, high-speed-data and telephony customers, not counting additional outlets.

For more on the SEC letters to Comcast and Cox, please see Ted Hearn’s story on page one of Monday’s edition of Multichannel News.

Mike Farrell contributed to this report.

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