WOW’s ‘Edge-Outs’ Can’t Overcome Video Attrition in Q3

Cable operator added 7,900 broadband users, but $12.9 million decline in TV subscription sales leads to 2.1% drop in overall revenue
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WideOpenWest continues to grow its high-speed internet business through its so-called “edge-out” strategy, adding 7,900 high-speed data customers in the third quarter.

WOW CEO Teresa Elder.

WOW CEO Teresa Elder.

But overall revenue for the Englewood, Colorado-based midsized cable operator dipped 2.1% to $285.4 million in the quarter, as WOW lost another 6,300 video subscribers. In short, the 9.4% improvement in residential broadband revenue to $11.2 million couldn’t offset the 10.8% decline in TV services revenue to $12.9 million.

Still, the video subscriber performance represented an improvement over the 7,100 users lost in the third quarter of 2018. And WOW sustained progress on its longer term goals, which are to grow revenue in the areas of residential broadband and business services. Subscription revenue for the latter grew 5.2% in Q3 to $34.7 million.

WOW ended Q3 with 773,900 broadband users, penetrating 24.1% of a footprint that grew by 14,000 homes in Q3 through the edge-out scheme. WOW said the edge-out growth resulted in the addition of 1,900 broadband subscribers in Q3.

During Friday’s earnings call with equity analysts, WOW CEO Teresa Elder was asked about WOW becoming a “hub” for OTT services, as opposed to a traditional video distributor.

“We feel very good about our ability to provide streaming services and we believe customers come to us specifically for that,” Elder said. (Transcript provided by Seeking Alpha.) “So it's definitely something that we encourage. And I believe that with the whole-home WiFi product, it's just an excellent customer experience. So we definitely embrace those changes.”

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