Mediacom Scores Big Revenues, Losses
LR Cable News Analysis Alan Breznick, Cable/Video Practice Leader, Light Reading 11/3/2006
Mediacom wallowed in more red ink even as it reported double-digit percentage hikes in revenues, operating income, and other key financial metrics for the third quarter. The MSO's quarterly net loss soared to $89.8 million from $2.7 million a year ago as it was hit with a $28.3 million charge for the early extinguishing of some long-term debt notes, a $15.9 million loss on some derivatives, and a $42.4 million payment for deferred income taxes.
The company's shares were down $0.06 (0.74%) to $8.05 in midday trading on Friday. That's not too far off the Mediacom's 52-week high of $8.46.
The surprisingly higher loss came even though Mediacom posted $305.6 million in revenues for the summer quarter, up 11.1 percent from $275.0 million in the year-ago period. The company also generated operating income of $56.0 million, up 23.9 percent from $45.2 million a year earlier. In addition, it reported adjusted operating income before depreciation and amortization (adjusted OIBDA) of $110.8 million, up 10.3 percent from $100.4 million in 2005.
Downplaying the heavier financial losses, Mediacom executives boasted about their company's performance, especially on the revenue and operational fronts. The MSO netted 57,000 revenue generating units (RGUs) over the three summer months, its second best quarterly increase ever, as its broadband, VOIP, and digital video services all enjoyed strong customer gains.
In its best category performance, Mediacom signed up 28,000 cable modem subscribers in the quarter, slightly outpacing its increase of 27,000 customers a year ago. The gain boosted the company's data customer total to 544,000, lifting its penetration rate to 19.3 percent of homes passed.
At the same time, Mediacom added 17,000 VOIP subscribers during the period, up from a nominal 2,000 a year ago when it first started rolling out the product. The MSO lifted its overall IP phone customer count to 83,000 as it expanded the digital voice product's reach to almost two thirds of its 2.8 million homes passed.
Turning to its core video business, Mediacom enlisted 18,000 digital cable subscribers in the third quarter, down somewhat from 22,000 a year ago. With the latest gain, it ended September with 514,000 digital video customers, raising its penetration rate to 36.9 percent of basic cable homes.
On the basic cable side, Mediacom shed 6,000 basic subscribers over the summer, extending its string of consecutive losses. However, the MSO did show some improvement over the year-ago period, when it lost 17,000 customers largely due to the wrath of Hurricane Katrina.
Besides touting their subscriber gains, Mediacom executives stressed that each cable customer continued to bring in more cash for the company in the third quarter. The MSO's revenue per basic subscriber climbed to a new high of $72.91 per month, up 14.4 percent from $63.76 in 2005.
Mediacom officials also said advertising revenues increased at a healthy clip in the third quarter. The company posted $15.5 million in ad sales during the quarter, up 14.3 percent from $13.6 million in the same period last year.
— Alan Breznick, Site Editor, Cable Digital News