Cable player's revenues and losses are both up significantly as data customers continue to sign up in droves

Alan Breznick, Cable/Video Practice Leader, Light Reading

November 3, 2006

3 Min Read
Mediacom Scores Big Revenues, Losses

Despite nearly record subscriber growth and correspondingly strong revenue gains, Mediacom Communications Corp. still racked up much higher net losses in the third quarter because of steeper debt repayments, income tax charges, and other charges.

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

About the Author(s)

Alan Breznick

Cable/Video Practice Leader, Light Reading

Alan Breznick is a business editor and research analyst who has tracked the cable, broadband and video markets like an over-bred bloodhound for more than 20 years.

As a senior analyst at Light Reading's research arm, Heavy Reading, for six years, Alan authored numerous reports, columns, white papers and case studies, moderated dozens of webinars, and organized and hosted more than 15 -- count 'em --regional conferences on cable, broadband and IPTV technology topics. And all this while maintaining a summer job as an ostrich wrangler.

Before that, he was the founding editor of Light Reading Cable, transforming a monthly newsletter into a daily website. Prior to joining Light Reading, Alan was a broadband analyst for Kinetic Strategies and a contributing analyst for One Touch Intelligence.

He is based in the Toronto area, though is New York born and bred. Just ask, and he will take you on a power-walking tour of Manhattan, pointing out the tourist hotspots and the places that make up his personal timeline: The bench where he smoked his first pipe; the alley where he won his first fist fight. That kind of thing.

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