With Q4 revenue of $561.2 million, a 2.2% increase over the prior year, Mediacom Communications marked its 100th consecutive quarter of positive year-over-year growth, entering a realm where only a handful of businesses have resided in modern business history, according to the company.
Adjusted Operating Income Before Depreciation and Amortization (OIBDA, a measure of cash flow) rose 8.2% in Q4 to $266.9 million. For the full year, revenue was up 4.3% to $2.2 billion and adjusted OIBDA increased 11.3% to $1 billion.
While results were strong -- the increases came despite Mediacom losing 3,000 broadband customers in the period -- it was the milestone that prompted Rocco Commisso, one of the last remaining cable executives to lead the company he founded and continues to control to this day, to issue a letter to shareholders commemorating the event. In an interview, he said the last time he issued a letter to shareholders was when the company went public more than 20 years ago.
Mediacom was formed in 1995 by Commisso, who after about 10 years as chief financial officer of CableVision Industries risked his life savings to start out on his own. He bought his first cable system in 1996 from Benchmark Cablevision in Ridgecrest, California, and now ranks as the fifth largest cable operator in the country, with about 2.6 million video, voice and data customers.
While the cable business has had its ups and downs over the past three decades, Commisso and Mediacom have kept their eye on the ball, sidestepping for the most part the consolidation craze of the late 1990s and early 2000s, while focusing on investing in infrastructure and growing the business.
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Along the way Mediacom went public (at $19 per share in 2000, valuing the company at about 18 times cash flow); spent $2.125 billion on systems, mainly in Iowa, formerly owned by AT&T in 2001 and went private again in 2010 after the markets lost faith in the cable business in general.
Through it all Commisso has kept his focus, expanding his network with an aggressive fiber buildout and bringing state-of-the-art high-speed services to rural communities. Mediacom deployed 1 Gigabit per second internet service throughout its footprint in 2017, staking a claim to be the first major cable company to do so. Mediacom said it has invested nearly $13 billion to fund acquisitions and to build and upgrade a national network that spans 600,000 fiber miles and serves 1.5 million customers across 22 states.
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The AT&T deal in 2001 transformed Mediacom, more than doubling its size and raising its debt load to its highest level ever, about 8.3 times cash flow. Even at that level, Mediacom’s leverage was lower than some of its peers: Charter Communications at the time had a debt-to-cash-flow ratio of about 16 times. But the deal gave Mediacom the clout to begin offering high-speed data service in areas that hadn’t seen it before and positioned it for an unprecedented period of growth. Since buying the former AT&T systems in 2001, Mediacom has grown annual revenue from $885 million to more than $2.22 billion and upped annual adjusted OIBDA from $335 million to more than $1 billion.
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While that is an achievement in and of itself, 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. Earlier this month, Standard & Poor’s raised Mediacom’s investment grade credit rating to BBB+, higher than far-larger telecom rivals like AT&T and a feat that would have been unheard of in the sector when the company began.
“I am pleased to say that the decision I made in 1995 to bet my life savings and my family’s future on serving neglected small communities in rural America has paid off, not only for me, but also for the thousands of employees and their families whose livelihoods depend on Mediacom’s continued success,” Commisso wrote in the letter to shareholders. “Since 2001, Mediacom has added more than 500 new positions to our highly skilled workforce, spent over $5 billion on employee payroll and made more than $500 million in 401(k) and medical benefit contributions.” ■
