Mediacom Communications Corp. subscribers can expect cable rates to go up
soon, especially if they are former AT&T Broadband customers with digital
service.
Chairman and CEO Rocco Commisso said Wednesday that AT&T Broadband's
digital offering in the four states where Mediacom bought 800,000 subscribers
last year was quite popular, achieving a penetration rate of about 29
percent.
That's because AT&T Broadband launched digital service more than four
years ago in some places as a way of adding channels to systems it hadn't
upgraded. Such typically analog-distributed channels as TV Land, Sci Fi Channel
and Home & Garden Television are on older AT&T digital packages.
Those are expensive channels to offer on digital, so Mediacom wants to
migrate them to analog, where wider distribution would make them cheaper on a
per-home basis.
'We may be slimming down the [digital] package in some systems' and moving
some channels to analog where capacity permits, Commisso told analysts during a
call held to explain fourth-quarter financial results.
At any rate, cable prices are going up at all Mediacom systems, especially
for digital customers, he added.
Commisso said all Mediacom customers would see their bills rise, with most
hikes to take effect in March.
The price increases, cash-flow improvements at the former AT&T Broadband
systems (because Mediacom's overhead is much lower than AT&T Broadband's)
and new-product rollouts helped Commisso to 'guide' analysts to 2002 forecasts
that Farber put 'at the upper end of the expected growth rates of the cable
sector' this year.
The forecast for Mediacom in 2002 calls for revenue growth of 10 percent to
11 percent and cash-flow growth of 16 percent to 17 percent, Farber said.
Commisso expects digital churn to spike after the price increase, but he said
digital growth should pick up in the second half of the year. Mediacom should
end up with about as many net digital additions (74,000) as it achieved in 2001
(67,000) on a pro forma basis, he added.
Data additions for the new Mediacom Online -- the successor to Mediacom's
Excite@Home Corp. service -- should also pick up speed. Farber estimated 79,000
net data adds in 2002, up from about 49,000 in 2001.
In the fourth quarter, results were as analysts expected: Revenue rose 4.6
percent to $214 million and cash flow rose 12.3 percent to $90 million year over
year.
Commisso and chief financial officer Mark Stephan noted that Mediacom's
remaining upgrades are fully funded, as the company has about $1.1 billion in
available credit.
Mediacom wants to finish its upgrades by June 2003.
