Cox Slows VOD Despite Strong 2Q

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Cox Communications Inc. is slowing its rollout of video-on-demand in light of
the financial community's scrutiny of cable-industry capital expenditures.

The MSO had planned to launch its 'Entertainment on Demand' service in seven
markets representing 43 percent of homes passed. It will now launch in only four
markets serving 30 percent of its homes passed by year's end.

The company said it was redirecting capital dollars from the 'saved' launches
to San Diego and Hampton Roads, Va., and it will offer premium-network
subscription-VOD in those markets.

The moves will allow Cox 'to fully understand the business model before
making further investments,' executive vice president of operations Pat Esser
said during the company's second-quarter conference call.

Overall, Cox's second-quarter results were strong, with revenue and operating
cash flow up 16 percent each.

In addition to the reduced VOD deployment, the MSO said it would also hold
off on acquisitions in the short-term.

'We will not be making any acquisitions in the near term,' CEO James Robbins
said. 'Given the current state of the market, we are unwilling to issue equity
to support acquisitions, and we are working to further reduce debt.'

Cox reported revenue of $1.1 billion and operating cash flow of $442 million
in the period, fueled primarily by strong growth in its cable systems.
Basic-subscriber growth was up 1.6 percent year-over-year to 6.25 million
customers. High-speed-data and digital-video customers rose by 114,000 and
578,000, respectively.

Basic growth was down sequentially from the first quarter by about 25,000
customers. Still, Cox said on the call that second-quarter basic losses were
lower than the 47,000 subscribers the company lost sequentially between the
first and second quarters of 2001.

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