More than a quarter-century after risking his life savings to start a cable company specifically focused on secondary and rural markets, and months after logging 100 straight quarters of revenue growth, Mediacom Communications chairman and CEO Rocco Commisso said he isn’t done yet.
Mediacom finished the fourth quarter with $561.9 million in total revenue, a 2.2% increase over the prior year and the 100th consecutive quarter of positive year-over-year growth for the company Commisso started in 1995, an accomplishment it said only a handful of companies can claim.
Mediacom was first envisioned in an eight-page paper Commisso wrote in March 1995 after leaving CableVision Industries — where he served as chief financial officer for about a decade — titled “A Window of Opportunity.” In it, he mapped out a vision for bringing cable to small markets. At the time, the chairman believed it was a venture that would last at least a couple of years.
“We never expected to be at this level,” Commisso said. “We were going to get out after five years. But things evolved. The things that helped me the most were, one; the support I always had from the debt community, and two; that I turned a lot of things down so I could keep control of the company.”
Commisso bought his first cable system in Ridgecrest, California, in 1996 and today Mediacom has 2.6 million voice, video and data customers in 22 states. The mix of customers has changed dramatically, as most are broadband subscribers instead of video customers. But the idea is still to provide good service at a reasonable price and continue to invest in the business.
Along the way, Mediacom went public, at $19 per share, in 2000; spent $2.125 billion in 2001 on systems mainly in Iowa formerly owned by AT&T; and went private again in 2010, after the markets lost faith in the cable business.
“Twenty-five straight years of growth is a remarkable achievement for any business,” MoffettNathanson senior analyst Craig Moffett said. “It’s true that Rocco has been a brilliant financial engineer. But that sells him short. The real story is that he has also been a terrific operator. They’ve put up really nice numbers quarter after quarter. It’s a testament to a very well-run business.”
The largest acquisition was the one in 2001 from AT&T of systems in Iowa and three other states. That deal more than doubled Mediacom’s size, providing the clout to begin offering high-speed data in areas that hadn’t had it before and positioning it for an unprecedented period of growth. Since 2001, Mediacom has grown annual revenue from $885 million to more than $2.22 billion and annual adjusted operating income before depreciation and amortization (OIBDA) to more than $1 billion from $335 million.
But that was 20 years ago, and since then the industry has been turned on its ear. Commisso noted that in 2001, Mediacom had about 1.7 million primary service units (a combination of voice, video and data customers), including 1.5 million video customers and 100,000 high-speed internet subscribers. Today, broadband accounts for about 1.5 million subscribers and video customers number around 600,000, while total PSUs have grown to 2.6 million.
“Since 2001 we’ve lost over 1 million video customers,” Commisso said. “To lose all these customers and be able to triple your cash flow and grow your revenue every single quarter that we’ve been alive at Mediacom, in our opinion, is quite an accomplishment.”
At the same time, Mediacom continues to invest in the business — about $13 billion to fund acquisitions and to build and upgrade a national network that spans 600,000 fiber miles, Commisso said.
Still More to Do
“I am sure it will come as no surprise to anyone who knows me well that I am not about to stop pushing forward,” Commisso said in a chairman’s letter issued shortly after the Q4 results.
Commisso is most proud of his ability to keep Mediacom’s debt low. Today, the company’s leverage ratio stands at 1.2 times cash flow, among the lowest in the entire media and telecom sector. In February, Standard & Poor’s raised Mediacom’s investment-grade credit rating to BBB-plus, higher than much larger telecom rivals like AT&T and a feat that would have been unheard of in the sector when the company began. But he stressed that Mediacom will continue to invest — capex is averaging around $350 million per year — even as it moves to reduce debt.
“We’re investing in our business, in our community, in our people, in our infrastructure to stay in front of the competitive threats that are coming around,” Commisso said. ■
