Revenue was up 10 percent and cash flow rose 16 percent at Mediacom
Communications Corp. in the first quarter, fueled by strong growth in
Basic subscribers declined by about 8,000 in the first quarter, mostly due to
the sale of a 3,000-subscriber system in January and the relocation of about
2,000 customers who were military personnel in Florida, Georgia and Kentucky.
The remaining 3,000 subscriber lost were due to direct-broadcast satellite
In a conference call with analysts, chairman Rocco Commisso said that in
several markets, DBS competition launched local-into-local broadcast service in
conjunction with a Mediacom rate increase.
He added that that in light of seasonal trends, he expects to lose
subscribers between the first and second quarters, as well. But that should
reverse itself by the second half of the year, he said.
Despite those basic-subscriber losses, Mediacom reported strong growth in
digital and high-speed-data customers. The MSO added 5,000 digital customers (it
now has 374,000) and 24,000 high-speed-data subscribers (to 214,000) during the
Commisso said during the call that concerns that reduced pricing on competing
digital-subscriber-line services from several telephone companies would cut into
cable's high-speed-data market share are not affecting his company.
"DSL competition has become a hot topic lately, but we haven't seen any
discernible impact on our business," he added. "It's pretty clear that the low
densities in many of the small cities and towns we serve post significant costs
and technological hurdles for DSL. We can offer high-speed data as far as 100
miles from our master headend, while DSL sweats if their customer is more than
15,000 feet (three miles) from their central office."
Commisso said capital expenditures continued to fall, adding that Mediacom
should report free cash flow (cash flow after capital expenditures and interest
payments are made) in the second half of the year.
He also expressed optimism about moves by the industry to develop a $35
digital set-top box -- one without all of the bells and whistles of existing
set-tops. It is expected that such an entry-level low-cost box could be
available in the next 24 to 36 months and would drive the conversion of cable
systems to fully digital technology.
"The box cost has a lot to do with it," Commisso said. "In multimedia homes,
or homes with more than one [television] set, our company has not put four or
five converter boxes into those homes because that's an investment of about
$1,000. If we had a $35 box, or even one that was less than $80, we'd be pushing
the hell out of those boxes so we can find the means of converting everything on
the analog side to digital."
Mediacom stock rose a little more than 2 percent (20 cents per share), closing Monday at $9.70 each.