MSOs Offer Updates on New Services

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Several cable operators and programmers made the trip to Pasadena, Calif., for the Merrill Lynch Media & Entertainment conference Tuesday, using the forum to update investors on progress in new services but breaking little new ground.

Time Warner Cable chairman Glenn Britt kicked off the conference, reiterating the No. 2 MSO in the country’s strategy to continue to innovate, to conduct smart marketing and to improve customer service.

On the innovation front, Britt said Time Warner was the first MSO to introduce digital-video recorders and the first to fully deploy video-on-demand.

He offered a glimpse into the success of the VOD product -- the MSO said customers accessed 75 million streams in July, up 50% from December. The VOD product also had 2 million unique users in July, up 19% from December, and users accessed an average of more than 30 streams per month, up 27%.

VOD, particularly free VOD, has also had a dramatic impact on churn. In its Milwaukee market -- which offers Wisconsin On Demand, an FOD channel with local content -- churn averaged 4.43% per month before the product was introduced. After its introduction, churn dipped to 2.33%.

Comcast Corp. executive vice president, treasurer and co-chief financial officer John Alchin reiterated the No. 1 MSO in the country’s goal of double-digit revenue and cash-flow growth, translating into 35%-40% free-cash-flow growth in 2005. He added that Comcast’s digital-simulcast rollout will be 75% complete this year, as well.

Comcast senior VP of finance and general manager of voice services Catherine Avgiris said the MSO’s voice-over-Internet-protocol product is currently in 10 markets, and it is on target to expand to 20 markets and 15 million homes by the end of the year.

Avgiris added that Comcast has experience in the telephone market -- it inherited 1.2 million circuit-switched telephone customers from its 2002 acquisition of AT&T Broadband -- which should help in the rollout of VoIP services.

She said Comcast has turned around that telephone business -- it once was a $200 million cash-flow drain on the company, and it now generates $200 million of positive cash flow.

Time Warner Inc. Entertainment & Networks group chairman Jeff Bewkes reiterated guidance for the media giant -- high-single-digit growth in adjusted operating income before depreciation and amortization -- and also echoed the company’s support of its cable operations.

Asked about corporate raider Carl Icahn’s claim that Time Warner should completely divest of its cable business, Bewkes said cable will continue to be “a strong growth business over the next few years.”

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