Suddenlink Video Sub Losses Increase

Viacom Dispute A Factor in Defections
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Suddenlink Communications lost about 34,800 basic video customers in the fourth quarter, its first to show the impact of its decision to drop about 24 Viacom channels on Oct. 1, and about four times higher than the 8,600 video customers it shed in the same period in 2013.

Suddenlink dropped the Viacom channels on Oct. 1 after what it said were Viacom’s unreasonable pricing demands. Suddenlink was the second mid-market MSO to drop the channels – Cable One dropped Viacom on April 1 – and has signed on a slew of smaller channels like The Blaze, Sprout and Revolt TV to replace the lost networks.

In a statement, Suddenlink said that net video losses in the fourth quarter attributable to the loss of Viacom networks were approximately 2.0% to 2.5%, in line with its expectations. Adding that most customers that disconnected video because of Viacom, chose to keep other, non-video services.

For the quarter, high-speed data customers increase by 11,600 (compared to 20,600 additions during the same period in 2013) and phone customers decreased by 800 customers (compared to 9,600 additions in Q4 2013).

"The decision regarding Viacom reflects our commitment to protect our customers and offer them the best value we can," said Suddenlink chairman and CEO Jerry Kent in a statement. "We're confident we made the right business decision as we adapt to changing industry dynamics."

For the quarter, revenue rose 5.6% to $592.1 million and commercial revenue increased 12.6%. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), after the impact of non-recurring expense mainly associated with Suddenlink’s telephone platform migration, was $233.5 million, up 6%.

"We're very pleased with the performance of our business,” Kent said in a statement. “We gained new customers at a record pace last year and maintained existing customer relationships during a period of significant change. These results are a remarkable accomplishment by any measure and reinforce that we continue to make the right, long-term strategic decisions for our customers and company.

"We took a stand on run-away programming costs and rejected the notion that content providers are entitled to unjustified cost increases,” Kent continued. “Viacom attempted to impose such cost increases for content that has suffered significant ratings declines. We said no and the results since then show that it was the right decision. We retained 99.7% of customer relationships in the fourth quarter. Video customer losses were in line with expectations and, overall, we've performed better than expected. As a result we believe we have successfully challenged the current video business model, proving that our programming partners must deliver value to our customers in line with what they charge.”

Kent added that Suddenlink also made its first investments in Operation GigaSpeed, its plan to bring next-generation broadband to rural and suburban communities in its footprint in the fourth quarter.

"We believe Operation GigaSpeed will help us retain our strategic advantage of providing a superior broadband service for many years to come," Kent said in the statement

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