Mediacom’s largely disappointing 3Q metrics coalesced with jittery cable sentiment on Wall St Tues, sending the MSO’s stock price crashing through its 52-week floor to close Tues at $5.02 (-8.6%). Likely more alarming to chmn/CEO Rocco Commisso, however, is a pair of factors that may indicate comparatively more trouble at Mediacom than at its industry brethren: hypercritical analyst reaction to the results (with little variation) and the advancing share prices of Comcast, Time Warner Cable and Charter while MCCC faltered. Investors have responded similarly to cable equities in recent weeks, but not this time. “Mediacom is simply struggling, with EBIDTA growth at less than half the rate of its industry peers,” said Pali’s Rich Greenfield. Commisso and fellow execs acknowledged some negative results—softness in RGU growth, a high number of disconnects and failure to effectively upgrade HSD subs among them—and updated ’07 guidance accordingly. ’07 revenue growth of 6.5%-7% is now expected, down from 7%-8%, and OIBDA growth estimates were lowered to 4%-5% from 6%-7%. Also, capex is projected to exceed the previous $215mln estimate by $10mln, due mainly to outside contractor use, 3rd party call support and network upgrades. Even so, Commisso insisted that Mediacom is competitively positioned for the future, pointing to a $50mln board-approved stock repurchase plan as proof of long-term confidence. “We believe in… our company even with the hiccups we experienced from time to time,” he said. Myriad projects and plans are in the works to spur operational improvements, said evp, operations John Pascarelli, including the introduction of a low-end HSD service to combat encroaching DSL bundles and a HD plan that will offer customers 30-40 high-def channels for only the cost of a converter box. Phone service, a definite bright spot for the MSO, could also use some tightening. “We need to do a better job of getting existing customers to adopt [phone] service faster,” he said, noting that refinements to pricing/ bundling strategies across services are also required. What remains unclear is just how much Mediacom’s business has been affected by its carriage standoff with Big Ten Network. Pali’s Greenfield, who predicted last month a hefty impact from customer defections, had planned to ask this question Tues but never got the chance. Mediacom didn’t respond to a Cfax inquiry on the topic by deadline.

The Daily


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