Several cable companies made the trip to Pasadena, Calif., for the Merrill Lynch Media & Entertainment conference last Tuesday, using the forum to update investors on progress in new services.
Time Warner Cable chairman Glenn Britt kicked off the gathering, reiterating the No. 2 U.S. cable operator’s strategy: Continue to innovate, conduct smart marketing and 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 on-demand programming. He offered a glimpse into the success of the video-on-demand product: customers accessed 75 million streams in July (up 50% from December). VOD 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 the Milwaukee market — which offers Wisconsin On Demand, a free VOD channel with local content — churn averaged 4.43% per month before the product was introduced. After its introduction, churn dipped to 2.33% per month.
Comcast executive vice president, treasurer and co-chief financial officer John Alchin reiterated the No. 1 MSO’s goal of double-digit revenue and cash-flow growth, translating into 35% to 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 vice president of finance and general manager of voice services Catherine Avgiris said the voice-over-Internet protocol product is currently in 10 markets and on target to expand to 20 markets and 15 million homes by the year end.
Avgiris added that Comcast has experience in the telephone market — it inherited 1.2 million circuit-switched telephone customers in its 2002 acquisition of AT&T Broadband — which should help in the VoIP rollout.
Avgiris said that Comcast has turned around that telephone business: It once was a $200 million cash-flow drain on the company and 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 for 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.”