In its first full quarter under new ownership, Coaxial
Communications of Central Ohio Inc. appears to be holding its own in its fight with
Ameritech New Media, despite a loss of nearly 5 percent of its subscriber base.
Coaxial, which operates a small cable system in Columbus
Ohio, sold a 75 percent stake in that system to New York-based MSO Insight Communications
Co. in August for about $170 million.
Coaxial made the deal primarily because it needed a partner
with deeper pockets to help it finance a major upgrade of its system.
While that upgrade -- from 490 megahertz to 870 MHz --
should be completed soon, Coaxial has already shown improvement under its new management.
According to its fourth-quarter financials for the period
ended Dec. 31, Coaxial improved revenue by 2.1 percent to $12.2 million, and cash flow --
earnings before interest, taxes, depreciation and amortization, or EBITDA -- rose 23
percent to $5.4 million.
The results were positive despite Coaxial losing 4.6
percent of its subscribers -- it now has 87,637 -- primarily due to the end of a
significant discount-promotion period.
But Coaxial's work is far from done: Despite the
improvements in the fourth quarter, results for the year still fell short of expectations.
Revenue for the year ended Dec. 31 was $47.9 million, down
from $48.2 million in 1997. EBITDA for the period was $18.3 million, down from $19.3
million in 1997, and EBITDA margins for the year were 38.1 percent, compared with 40.1
percent in the previous year.
In its fight for customers with ANM, the cable-television
arm of Chicago-based regional Bell operating company Ameritech Corp., Coaxial had cut its
prices by as much as 40 percent in some places.
ANM, which began offering service in Columbus in June 1996,
had been trying to lure customers with giveaways like supermarket coupons and movie
That price battle took its toll. Kim Kelly, executive vice
president and chief operating and financial officer at Insight, said revenue per
subscriber during the yearlong price promotion -- which was started by Coaxial's
previous owners -- depressed average revenue per subscriber by $3.
Those revenue-per-subscriber numbers are beginning to climb
back as customers are migrated back to normalized rates, increasing by $1.78 during the
quarterly period to $45.55. Cash-flow margins also increased during the period, to 44.4
percent from 36.9 percent in the same period in 1997.
Cash-flow and revenue-per-subscriber numbers also should
improve as the company's $25 million system upgrade nears completion, allowing
Coaxial to introduce digital-television and cable-modem services later this year.
Kelly said the company is pushing to have the upgrade
completed by the end of the first quarter in areas representing about 130,000 homes passed
in the Columbus market. She added that a digital entry-level package, which is already
being offered in Insight systems in Indiana, could make its way to the Columbus market
That package, called "Digital Gateway," includes
a navigator; 40 channels of digital music; Local Source, an interactive channel from
Source Media Inc.; and a Diva Systems Corp. video-on-demand service package.
Kelly said the company is testing the Local Source service
now, and the Diva service could finish testing by the end of May.