Insight Ignites: MSO Blazes a Solid 2Q

Although vice chmn/CEO Michael Willner declined to discuss Insight’s ongoing review of strategic options Fri, potential suitors were likely salivating over the MSO’s results. Bucking the recent cable trend, Willner gushed about "probably the best 2Q we’ve ever had as a company… We actually combined our record operating performance with record financial performance." Indeed, the list of unprecedented achievements is lengthy: record 2Q RGU growth (53K), rev growth (+14% to $356mln) and basic video performance (-3K subs), and a historical best for any Q in net phone adds (29K). Critics may cite basic sub loss as a negative, but given that Insight loses approx 14K students/subs every 2Q, "we actually look at this as a gain of 11K basic customers," said pres/COO Dinni Jain. And despite falling into line with peers by posting lower HSD adds (19K, -4%), Jain discounts the effect of a possible HSD service glut in the US. "If there is a maturation effect in this business, we are far away from reaching that," Jain said of Insight, countering speculation that MSOs may have peaked across several services. Said Willner of Wall St’s recent cable drubbing: "Generally speaking, people [are] putting more emphasis on [underperforming] individual line items… than they do in a more bullish or stable market." Quipped Jain about Cablevision’s 2Q: "I’d be happy to have terrible second quarters like that." Jain did say sales complexity resulting from a large and increasing number of cable service offerings remains a challenge, but Willner reiterated that "we are very, very, very pleased with the Q." The share prices of Insight, Comcast, Charter and Mediacom all advanced Fri, while Time Warner Cable and CVC shares declined.