Mediacom: Long-Term Focus Pays Off


A year after turning its back on public
markets, Mediacom Communications lost more subscribers
in 2011 than the year before but, overall, did
better financially
while investing
more in the long-term
company executives

Revenue at the
mid-market MSO
rose 3.4% in 2011 to
$1.6 billion and operating
income before
and amortization
(OIBDA) rose 7.8%
to $589 million.
That was the best performance since 2008, when revenue
rose 8.4% to $1.4 billion and adjusted OIBDA increased
10.6% to $511.9 million, the company said.

Executive vice president and chief financial officer Mark
Stephan said the results reflect a private-company focus
on long-term gains versus short-term losses, including on
customer rolls.

Mediacom got
tough on pricing
last year,
Stephan said,
and refused to
get into di scounting
with compet itors.
That weeded
out some
video-only customers.
shed about
124,000 basic
video customers
in 2011, versus
a loss of 45,000
basic subscribers
in 2010.

But monthly
revenue per
primary service
unit (PSU) — a
measure of video,
voice and
data customers
— climbed about

“We did a great
job on unit pricing
,” Stephan
said. “Not so
great on units.”

Mediacom, founded by chairman and CEO Rocco Commisso
in 1995, went private on March 4, 2010, after about
10 years as a public stock, the last few marred by low valuations
and a stagnant stock price.

Mediacom still has public debt and still files public financial statements. But debt investors are markedly different
than equity investors and focus their attention on
different metrics.

Free cash flow is watched closely by stock investors,
while debt holders are more focused on cash-flow coverage
of interest payments, Miller Tabak media analyst David
Joyce noted. “So, yes, I think Mediacom can perform
well as a private company as they can more freely reinvest
their free cash flow in the business, largely in the form of
more capital expenditures to upgrade customer services
and experiences.”

Mediacom in 2011 spent 12.4% more on capital expenditures,
to $269.2 million, and free cash flow still rose
7.8% to $118.8 million.

“When you’re public, you’re always looking over your
shoulder when you make decisions,” Stephan said. “Would
we have been so tough on pricing last year and suffered the
losses that we did? I don’t know. I think we probably would
have just started
discounting our
video product.”

He said Med
iacom a l so
felt more free to
spend capital on
all-digital upgrades,
its cellular
backhaul business
and beefing
up its high-speed
data network.

customer losses
in another
way, Mediacom
last week announced
a series
of customer service enhancements,
initiating night
and weekend appointments

that schedule
the first appointment in
the morning or
afternoon can expect a Mediacom technician to arrive
at their homes within an agreed upon 30-minute timeframe,
instead of the more typical four-hour window.

Mediacom also instituted a 90-day money back guarantee
for new customers, adopted a new slogan — “The
power to simplify” — and embraced a new spokesperson,
Mindy, as part of new ad spots. It’s also reintroducing
some products and packages to make them easier for
customers to understand.

“We’re kind of reinventing ourselves in a way,” Stephan