Weak Economy, Competition Drag Mediacom in Q3

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A weak economy and tougher competition drove sluggish third quarter results for Mediacom Communications, with revenue and cash flow growth below analysts' expectations.
Revenue at the small market MSO was up just 3% to $374.4 million, below consensus estimates of $376 million for the quarter. Adjusted operating income before depreciation and amortization rose just 0.7% to $132.2 million.
On a conference call with analysts Monday, Mediacom chairman and CEO Rocco Commisso blamed the sluggish showing on the ongoing recession and competition from satellite TV and telco video.
Mediacom lost about 13,000 basic video customers in the period, an improvement from the 19,000 basic customers it lost in the third quarter last year. Digital cable subscribers rose by 12,000 in the period, improving penetration of that service to about 60%. High-speed Internet customers rose by 62,000 in the period and telephony subscribers increased by 50,000.
Commisso said Mediacom was building for the future by moving forward with its rollout of DOCSIS 3.0 technology - which should reach about 50% of its footprint by the end of the year - and plans to transition its telephony network from a third-party provider in-house.
With greater DOCSIS 3.0 availability, Mediacom will be able to roll out higher speed data services. And by being in control of its own telephony network - expected to be completed b the second quarter of next year - the company will be able to enhance its existing commercial phone offerings and introduce new commercial products, Commisso said.
Executive vice president of operations John Pascarelli said on the call that Mediacom has doubled its commercial sales force to about 60 people (45 reps dedicated to small and medium sized businesses and 15 dedicated to enterprise customers). He declined to estimate how large the commercial market could be for the MSO.
Later on the call, Commisso, an outspoken critic of rising programming costs over the years, commented on some of the recent carriage fights that have raged in the industry, including Fox Networks' recent disputes with Dish Network and Cablevision Systems. Commisso, who back in 2007 asked for Federal Communications Commission intervention in his retransmission consent fight with Sinclair Broadcasting (he was rebuffed), criticized government regulators for not getting involved in what has become a pressing consumer issue.
"All my fears have come true," Commisso said, "because it's not just Mediacom that is now suffering the consequences of inaction by the government on something that is very important to the consumer. I think what we have seen with Dish and with the Fox/Cablevision situation is frankly what I had forecasted years ago, but the government has not been willing to do anything about it. It's amazing to me that the FCC in particular who has been entrusted with the responsibility to protect the consumer goes out to look for authority to address theoretical issues on net neutrality but always seems to find no authority to take care of the consumer when it comes to retransmission consent."

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