Spring in Step for Four MSOs

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Four big cable companies reported earnings last week that, for the most part, blew away analysts’ predictions, bolstering optimism the industry is winning the battle with satellite and telephone company competitors.

Comcast Corp. was first out of the box, reporting a 21% increase in operating cash flow on a 9.8% rise in revenue.

That outpaced Deutsche Bank Securities cable analyst Doug Mitchelson’s estimates all around. Mitchelson wrote in a report last week that because of the better-than-expected numbers, he believed Comcast was on track to reach his full-year operating cash flow estimate of $7.4 billion (a 17% increase), at the high end of management’s guidance of 15% to 17% growth for the year.

Comcast also added 35,000 basic-video subscribers in the quarter. High-speed data additions were 394,000 customers and digital additions were 192,000 customers. Comcast also reported $400 million of free cash flow.

TWC WAS STELLAR

Time Warner Cable also had a stellar quarter, reporting overall revenue growth of 9%. Operating income before depreciation and amortization rose 27%.

Fuelling that growth was Time Warner’s cable systems and its networks operations, which include cable and broadcast channels. The cable systems reported a 9% increase in OIBDA to $750 million, on revenue of $2.04 billion (up 11%). While basic subscribers were essentially flat in the period at 10.9 million customers, Time Warner Cable added 137,000 digital customers and 193,000 high-speed-data subscribers.

Cox Communications Inc. probably surprised observers most, posting sequential gains in high-speed data subscribers as data growth slowed down across the rest of the industry.

Cox also reported 13% revenue growth and operating cash flow growth of 18%.

Cox added 161,442 data customers in the period, a 12% increase, well above analysts’ estimates.

Fulcrum Global Partners analyst Richard Greenfield was impressed with the data adds, especially since Cox has significant exposure to one of the more aggressive telephone companies in terms of DSL rollouts — SBC Communications.

Digital additions also beat predictions — at 78,959, compared to expectations of 74,000 adds — telephony additions at 76,813 outpaced many analysts’ predictions of 75,000 additional customers.

INSIGHT ENCOURAGED

Insight Communications Co. was the last to release results — on Friday — and also managed to report encouraging results.

Insight added 4,300 basic-video customers in the quarter, a major increase over the 100 basic adds in the fourth quarter and a sign that Insight is reversing the losses of past quarters to DBS competition.

Revenue increased 11% in the period and cash flow was up 12%, also exceeding expectations.

Digital subscribers rose by 15,500 to 418,400 and high speed data subscribers rose by 28,000 to 258,000 customers.

Insight chief operating officer Dinni Jain did warn that the company could lose basic customers in the second quarter — he estimated that about 13,000 basic customers are students and snowbirds that leave their homes during that period — but were expected to return in the third quarter.

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