Digital-subscriber growth and the completion of a joint
venture with AT&T Corp. helped to drive revenue and cash-flow growth at Insight
Communications Co. Inc. during the third quarter.
Cash flow grew 70 percent to $21.2 million on revenue of
$46.6 million (up 83 percent), largely due to an earlier system swap with AT&T
Broadband & Internet Services that added about 160,000 subscribers. Even without those
systems, revenue would have risen 14 percent quarter-over-quarter, Insight executive vice
president Kim Kelly said in a conference call.
But net losses ballooned to $67.7 million in the quarter,
or $1.55 per share, compared with a loss of $299,000 (11 cents) in the same period last
year. The quarter was packed with milestones for the company, including the completion of
a $600 million initial public offering in July and the rollout of digital services.
Insight began rolling out its digital product -- called
"Insight Digital Gateway" -- in Rockford, Ill., during the quarter, and the
company said results are beyond its original expectations. Digital subscribers in its
Illinois and Indiana systems rose 7 percent from the second-quarter total to 22,200
Buy rates for its Diva Systems Corp. video-on-demand
offering are topping 300 percent, and penetration rates for the service are averaging
about 8 percent to 9 percent, the MSO said.
Insight said it launched digital in Columbus, Ohio, earlier
this month, and it will add the service to its Evansville, Ind., system in December.
Insight chairman Michael Willner said during the conference
call with analysts that marketing efforts for the digital service in Rockford haven't
begun yet. He added that those efforts will step up in that area as the Christmas season
Insight completed its acquisition of a 50 percent interest
in systems in northern Kentucky with 425,000 subscribers from InterMedia Partners in
October. Kelly added that the Kentucky systems are averaging 1,000 new digital subscribers
per month. Churn for the digital product is about 2 percent companywide, around one-half
of the industry average.
Competition from Ameritech New Media, a subsidiary of
Chicago-based telephone company Ameritech Corp., in its Columbus system appears to be
waning, Willner added in the conference call. Ameritech's new parent, SBC Communications
Inc., said it is holding off on adding new cable franchises as it evaluates ANM's video
"We have a sense that the actual expansion of systems
throughout the Midwest seems to be slowing down a bit," Willner said.
As far as telephony goes, Kelly said the company is
continuing to work with AT&T to hammer out a deal.
"We are moving quickly toward an agreement with
AT&T," she said. "We're working out some economic and operational issues. We
should be able to offer local [telephone] service by late in the third quarter of next