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Local Channels via DBS Chip Away at Mediacom

5/07/2004 5:56 AM Eastern

An aggressive expansion of direct-broadcast satellite local-to-local launches in its service territories contributed to a fifth consecutive quarter of basic-subscriber losses at Mediacom Communications Corp., but the Middletown, N.Y.-based MSO is making moves to stem the exodus of cable customers.

Mediacom lost about 10,000 subscribers in the first quarter, finishing the period with 1.5 million. The losses were actually about 14,000 customers, but they were partially offset by the acquisition of about 4,000 subscribers in February.

Mediacom also lost about 11,000 digital customers, finishing with 372,000, also due to increased local-to-local penetration. It was the third consecutive quarter of digital losses. High-speed-data customers increased by 42,000 to 302,000.

Chairman and CEO Rocco Commisso said the basic losses were mainly due to the increased availability of local broadcast channels via DBS competitors. He added that at the end of the first quarter, local-to-local DBS service was available in 81% of Mediacom’s markets, compared with 62% at the end of last year.

Despite the basic-subscriber losses, Mediacom managed to report solid growth -- revenue was up 8.5% and operating income before depreciation and amortization was up 7.3%.

The MSO also reported $17.2 million of free cash flow (cash flow after interest payments and capital expenditures are made) and said it was well on track to meet its guidance of $50 million in free cash flow for the year.

Commisso said Mediacom was making moves to bring customers back into the fold.

It has launched a lower-tier data service in select markets (at 128 kilobits per second upstream and 64 kbps downstream) to compete with dial-up and priced at $22.95 per month (there is an additional $3 monthly charge to rent the cable modem).

In addition, Mediacom has packaged the slower-speed data service with a digital-video offering for about $49.95 per month -- about the same monthly cost of its highest-tier data service alone.

“It’s a tremendous proposition and the initial results are good,” Mediacom executive vice president of operations John Pascarelli said in a conference call with analysts.

 

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