Mediacom: Revenue Up, Subs Dip

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Mediacom Communications Corp. reported revenue gains ahead of expectations in the fourth quarter while also suffering basic- and digital-subscriber losses.

Revenue rose 8.3% year-to-year, to $258.8 million, which was also a 3% gain over the third-quarter figure, as the 1.543 million-subscriber cable operator eliminated some price discounts in an effort to boost profitability.

The biggest revenue gain came from the high-speed Internet business, up 58% year-over-year, while video revenue rose 3.5%.

Mediacom reported $9 million (8 cents per share) in free cash flow in the quarter, up from $1.9 million in the third quarter and more than reversing $62 million in negative cash flow in the fourth quarter of 2002.

But Mediacom, which operates in many rural areas, had about a 3% year-over-year loss of basic subscribers, a net loss of about 9,000.

The MSO’s digital-customer count declined by about 10,000 -- its first quarter without digital gains since the second quarter of 2002, when Mediacom raised the price of digital packages previously offered by AT&T Broadband, Merrill Lynch & Co. observed in a research note.

Mediacom is considered vulnerable to marketing attacks from direct-broadcast satellite services, especially when DBS retransmits local-broadcast signals into its markets.

Executives, including chairman and CEO Rocco Commisso, said in discussing the quarter’s results with analysts on a conference call Tuesday that Mediacom is working on enhancing its product mix instead of aggressively matching DBS discounts.

Upcoming innovations will include a launch of Motorola Inc. digital-video-recording set-tops in March; heavier marketing of a recently introduced HDTV tier featuring HD services from ESPN, HDNet and Bravo; and a fourth-quarter launch of Internet-based phone services.

For the full year, Mediacom nosed above the $1 billion revenue mark for the first time.

In late-morning NASDAQ trading Tuesday, Mediacom’s share price was up 14 cents, or 2.5%, to $8.14 each, before finishing the day unchanged at $8.

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