MSOs Eye Standardizing Accounting

Author:
Updated:
Original:

Still smarting from the Adelphia Communications Corp. accounting scandals,
publicly traded cable operators are discussing ways to develop uniform standards
concerning how they report some of their basic operating metrics in an effort to
make it easier to understand their companies.

News of the discussions was first reported in sister publication
Broadcasting & Cable.

Led by Insight Communications Co. Inc. CEO Michael Willner -- also chairman
of industry trade group the National Cable & Telecommunications Association
-- the group is made up of top executives at major MSOs including Comcast Corp.
president Brian Roberts, Cox Communications Inc. CEO Jim Robbins and Time Warner
Cable chairman Glenn Britt, according to B&C.

Just what standards the industry group will come up with remains to be seen,
but it is likely that they will center around methods of counting subscribers
and more detailed information regarding capital expenditures.

For example, different MSOs count bulk rate subscribers in different ways --
for a 100-unit apartment building receiving a 20 percent discount, one may count
all of the units as basic subscribers, while another may only count 80
units.

With capital expenditures, the MSOs are looking for ways to break out
success-based capital expenditures (capex tied directly to revenue), maintenance
capex (the cost of maintaining the core business) and upgrade capex.

'We've all been pretty transparent with the way we define our own numbers.
The problem has been that our business has gotten much more complex today than
it used to be when we were very simply in the video business and there wasn't a
whole lot of thinking that had to go into what a subscriber was. It didn't
matter that we were all a little different,' one source familiar with the group
said.

'But now these companies are so complex in the different services they offer
that the carry-forward of definitions from 30 years ago that we're still using
may not be applicable anymore,' the source added.

It is expected to take at least several weeks for the group to decide whether
to move ahead.

The source added that this in no way would mean sweeping changes in MSO
reporting or financial accounting methods, which are the territory of the
Financial Accounting Standards Board.

'We're just trying to give some broad strokes on the big numbers that the
street looks at,' the source said. 'To the extent that we can be more consistent
from company to company in doing that, we're making the effort.'

Willner declined to comment, but the initiative appears to have stemmed from
comments he made in June, when, on a conference call with analysts discussing
Insight's accounting practices, he said the industry should look into making its
numbers more understandable.

Related