WOW Bucks Cable Trend
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