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WOW Bucks Cable Trend

Alan Breznick
3/19/2014
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Unlike most major US cable operators, WideOpenWest (WOW) ended 2013 on an upbeat note, picking up video subscribers for the second straight quarter.

WideOpenWest Holdings LLC (WOW) , a big cable overbuilder that now has more video subscribers than all but eight of the nation's traditional MSOs, reported this week that it added 3,700 basic video subscribers in the fourth quarter. While this may seem like a pretty pitiful increase for a company with nearly 700,000 video customers, it was a better performance than nearly all of the large cable operators reported for the period. Except for Comcast Corp. (Nasdaq: CMCSA, CMCSK), all of the major publicly owned MSOs reported video customer losses for the fall quarter.

The fourth-quarter increase for WOW also came on top of a larger subscriber gain in the third-quarter, a period when big MSOs like Time Warner Cable Inc. (NYSE: TWC) and Cablevision Systems Corp. (NYSE: CVC) shed subscribers in buckets. WOW, which competes against either TWC or Comcast in most of its predominantly Midwestern markets, netted 8,400 customers in the second quarter, leading to a gain of more than 12,000 customers for the second half of the year.

Despite the second-half surge, WOW still ended 2013 with fewer video subscribers than it had at the start of the year. For the year, the provider lost about 10,000 video customers, due to steeper losses over the first half of the year, pushing its total down to 694,000. (See WOW Loses Subs Across the Board.)

Like most cable operators, WOW is now enjoying greater success on the broadband side of the business and actually has more data customers than video customers. The company added 14,600 high-speed data subscribers in the fourth quarter, after gaining 16,300 customers in the third quarter. For the year, it netted 31,300 broadband subs, boosting its total to 740,000.

WOW executives credited the gains at least partly to the strides they're making in cutting customer churn rates and integrating the cable-like systems they took over from another, smaller cable overbuilder, Knology, in July 2012. Speaking on the company's quarterly earnings call with analysts Wednesday, they said they're focused on bringing the former Knology systems up to "product parity" with the legacy WOW systems.

WOW president Steven Cochran said the product parity push is leading to more HD channels and higher broadband speeds in the former Knology markets. Cochran, who will take over as company CEO when current CEO Colleen Abdoulah steps down from the post at the end of the month, said WOW is also pushing ahead with all-digital conversions in the old Knology markets, which are located mainly in midsize and smaller metro areas throughout the Southeast. "We're trying to get the acquired markets to look like our overall markets," he said. (See WOW! Names Executive Leadership.)

Besides bringing the Knology systems up to snuff and cutting churn rates, Cochran said WOW is heavily focused on beefing up its business services capabilities. With its networks in such major markets as Chicago, Detroit, Cleveland, and Columbus, he said the company spent much of 2013 building its commercial platform, staffing, and products so it could roll out business services in a big way this year.

"We invested in people and technology," he said. "We're very focused on service delivery."

With this new commercial focus, WOW has already launched Metro Ethernet and SIP trunking service so far this year. Cochran said plans also call for rolling out hosted voice service by the summer, along with some kind of "HFC product to expand our footprint" further down the road.

WOW, which generated slightly higher pro forma revenues of nearly $1.2 billion in 2013, said it expects revenue to rise 6% to 8% in 2014. It expects capital spending to rise by the same amount, due mainly to heavier spending on business services.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

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Phil_Britt
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Phil_Britt,
User Rank: Light Sabre
3/20/2014 | 7:26:53 PM
Re: Pay attention to WOW
Again, WOW isn't perfect, my experience is that it's a far sight better than the cable competition. I've never looked at Dish or other satellite providers because I don't see them as viable solutions for my needs. 
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
3/20/2014 | 6:24:02 PM
Re: Pay attention to WOW

Do you think customer service is key to WOW's bucking the industry trend?

I wouldn't count these results as a victory. One quarter of tepid growth, combined with year-over-year decline, is not a great result.

Phil_Britt
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Phil_Britt,
User Rank: Light Sabre
3/20/2014 | 3:17:26 PM
Re: Pay attention to WOW
What they are doing right is providing decent customer service. I've been a WOW customer for more than a decade. One year I switched to Comcast for a "deal," and it wasn't a week before I wished I could switch back (stuck in a one-year contract). 

Comcast ran cable where it was convenient for them and had almost non-existent customer service.

That's not to say WOW is perfect. I've had a few issues, but the company is pretty good about providing something off the bill if there's a problem. 
KBode
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KBode,
User Rank: Light Sabre
3/20/2014 | 9:06:04 AM
Re: Pay attention to WOW
They're certainly doing something right. I seem to recall that they pretty consistently win the JD Power award for customer satisfaction in the North Central region. That's no small feat for a cable industry  that traditionally is a basement dweller in most of these surveys.

There's something to be said for remaining modestly sized and focusing on what's on your plate.
albreznick
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albreznick,
User Rank: Blogger
3/19/2014 | 10:15:24 PM
Pay attention to WOW
WOW doesn't get much attention but it should. It's the 9th largest cable operator in the US and operates in a bunch of major markets, especially in the midwest. And it's clearly expanding both its footprint and product set. Sop I'd keep my eye on them, despite the silly acronym.   
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