The cable industry has been on quite a tear for the past four or five years, building out and launching digital TV, high-speed data and, most recently, VoIP services. It’s not surprising, then, that the torrid growth in cable’s new services would cool, and I think that, with the exception of Comcast, cable is going through a growth cooling period.
The latest example is Cablevision Systems, which issued its Q3 06 earnings report this morning. Without a doubt, Cablevision is doing very well, with (non-programming) revenues advancing 18.1% year-over-year and 2.5% sequentially to $1.076 billion. Cash flow, the key profit metric for cable, was up 16.4% year-over-year to $411.5 million.
The other unambiguous piece of good news is that Cablevision posted its tenth straight quarter of basic subscriber gains, a rare track record for the cable industry given that most cable companies are emerging from a period of bruising competition with DBS providers. Cablevision’s core video customer count rose 3.3% year-over-year and .3% sequentially to 3.11 million.
However, Cablevision added around only 94,000 net new digital customers during the quarter, down about 35% from Q3 05 gains and down 7.9% from Q2 06 gains. High-speed data growth cooled too, with the New York metro area operator adding only 72,458 net new modem subscribers during the quarter, down 10% year-over-year and 14.6% sequentially.
Even the company’s popular Optimum Voice VoIP product slowed down its forward march. Cablevision added 113,086 net new voice customers during the quarter, a run-rate that was 7.9% lower than Q3 05 levels and down 7.5% from Q2 06 net telephony additions.
Cablevision’ slow-down is a reflection of its already-high, and indeed industry-topping, penetration of each of these products. By the end of the quarter, Cablevision’s digital TV penetration stood at 76% of total basic subscribers, while its Optimum High-Speed Internet service reached 43.3% of homes passed. Almost one in four homes passed by Cablevision purchased Optimum Voice by the end of Q3 06.
The strong acceptance rate of Cablevision’s products pushed the average revenue per customer to $111.13 per month, the highest in the industry.
Still, growth is what investors want to see. Cablevision plans to take the company private — the timing is right, then. With scorching growth now a thing of the past, and no clear path to the next big thing (except for wireless broadband services, perhaps), Cablevision might be able to draw up orderly business plans without Wall Street breathing down its neck.
| Cablevision Systems Operational Statistics | |||||
| Basic Subscribers and RGUs | 3Q05 | 4Q05 | 1Q06 | 2Q06 | 3Q06 |
| Homes passed | 4.47 | 4.48 | 4.50 | 4.52 | 4.54 |
| Basic subscribers | 3.01 | 3.03 | 3.07 | 3.10 | 3.11 |
| Pro Forma annual sub growth | 2.0% | 2.2% | 2.7% | 3.2% | 3.3% |
| Basic penetration | 67.3% | 67.5% | 68.1% | 68.6% | 68.5% |
| Monthly churn | 2.1% | 1.8% | 1.5% | 1.7% | 2.0% |
| Digital Video | 3Q05 | 4Q05 | 1Q06 | 2Q06 | 3Q06 |
| Digital subscribers | 1.84 | 1.96 | 2.13 | 2.27 | 2.36 |
| Quarterly net sub adds | 0.10 | 0.12 | 0.16 | 0.14 | 0.09 |
| Penetration of total basics | 61.2% | 64.8% | 69.4% | 73.2% | 76.0% |
| Monthly churn | 2.6% | 2.2% | 1.9% | 2.0% | 2.3% |
| High Speed Data | 3Q05 | 4Q05 | 1Q06 | 2Q06 | 3Q06 |
| Customers | 1.60 | 1.69 | 1.81 | 1.89 | 1.96 |
| Quarterly net adds | 0.08 | 0.09 | 0.11 | 0.08 | 0.07 |
| Penetration of total homes passed | 35.8% | 37.8% | 40.1% | 41.9% | 43.3% |
| Monthly churn | 2.4% | 2.0% | 1.7% | 2.0% | 2.4% |
| IP Telephony Voice | 3Q05 | 4Q05 | 1Q06 | 2Q06 | 3Q06 |
| Customers | 0.60 | 0.73 | 0.87 | 0.99 | 1.10 |
| Quarterly net adds | 0.12 | 0.13 | 0.13 | 0.12 | 0.11 |
| Penetration of Optimum Voice | 13.4% | 16.3% | 19.2% | 21.9% | 24.3% |
| Source: Emerging Media Dynamics analysis of company data. © 2006. | |||||
Posted by Cynthia Brumfield at 5:53 PM | Print | Comments (0)
Reporter Without Borders (Reporters Sans Frontieres, or RSF) has released its annual Internet enemies list, highlighting the countries that are the most oppressive when it comes to Internet-based freedoms, mostly those dealing with freedom of speech. Three countries have been removed from the offenders list — Nepal, Maldives and Libya — and one country, Egypt, has been added.
Although the organization doesn’t rank the countries from bad to worst, it does note that China “continues to be the world’s most advanced country in Internet filtering.” Although virtually all of the countries on the list filter web sites to block politically or socially “objectionable” content, and virtually all seem to have imprisoned bloggers or writers that violate the countries’ censorship laws, some noteworthy facts stand out.
—In Cuba, connecting to the Internet illegally, which pretty much means any home-based Internet connection, is punished by five years in prison.
—In Iran, where broadband Internet connections are banned, censors are now focused on blocking out web sites that deal with women’s rights.
—Less than 1% of the population is online in Turkmenistan.
On a positive note, Nepal, under a democratic regime since May 2006, no longer censors content or imprisons bloggers.
Posted by Cynthia Brumfield at 4:21 PM | Print | Comments (0)The big danger of rumors on the Internet is that the unsubstantiated reports take on accepted veracity if repeated by enough bloggers or web sites. Case in point: YouTube critic Mark Cuban posted what seemed to him to be a legit insider summary of Google’s $1.65 billion deal to buy YouTube.
The newsworthy part of this summary was that Google had set aside $500 million in reserve to defend itself against the inevitable copyright infringement lawsuits that would follow its acquisition of the video sharing site. The anonymous posting reinforced Cuban’s view that only a “moron” would buy YouTube due to its copyright infringement liabilities.
When Cuban posted this account, the entire blogosphere jumped on it, to the point that it became, well, the truth. Not so, Google CEO Eric Schmidt said yesterday at the Web 2.0 Summit.
Schmidt denied that a substantial sum of money had been set aside for copyright litigation, but did confirm that Google is fanning out to cut deals with content owners, in part to insulate YouTube from legal threats.
In a two-part question, Battelle asked whether Google’s deal included a secret reserve for legal claims and, secondly, what progress Google was making in striking licensing deals with media companies to avoid threats of legal action.
“The former is not true,” Schmidt said in response to the question of whether “a very large sum of money was set aside to buy peace” between YouTube and big media companies.
“The latter is,” the Google CEO continued. “We have visited as many media companies as we can” to reach copyright licensing deals that can insulate both YouTube and Google, he said.
Based on what I’ve read, Schmidt wasn’t real chatty about the details of this rumor, other than to deny the report. To quell any further repetition of the idea that Google put money in escrow to deal with copyright infringement matters, Schmidt could have been more fulsome in his denials.
But still, Schmidt denied it and Cuban’s anonymous source is probably full of hooey — that was my gut reaction when I first read Cuban’s posting, which is why I didn’t jump on it too. All in all, this episode is a classic example of turning rumor into truth if you can get enough people to repeat the rumor.
Posted by Cynthia Brumfield at 10:57 AM | Print | Comments (0)The Democrats now control the House of Representatives for the first time since 1994 and the complexion of Internet and telecom-related policy and legislative matters will change, perhaps dramatically. Republican control of the Congress has been so entrenched that the Democrats have played mostly defense for well over a decade and it’s hard to envision what the shape of a more proactive Democratic telecom and Internet legislative agenda might be.
But, what’s really, really interesting is that the House leaders on commerce, telecom and Internet matters are exactly the same as they were in 1994. As experienced DC hand Kim McAvoy reports at TV Newsday, it’s just like old times, with John Dingell (D-MI) and Ed Markey (D-MA) in charge of these matters, just like they used to be back before the Republicans took the House. Dingell is expected to resume his old role as Chairman of the House Energy and Commerce Committee and Markey will no doubt take back his leadership position on the House Energy and Commerce Telecommunications and the Internet Subcommittee.
That makes telecom and Internet-related legislative initiatives a new/old ball game. Both Dingell and Markey tilt toward populist, progressive policies and neither is a real fan of the cable industry. But times have changed since Dingell and Markey spearheaded these issues, with the Internet dominating practically every major matter affecting telcos, tech suppliers, cable operators, wireless companies, Hollywood…just about everybody in the entertainment and communications industries.
The new landscape make easy predictions difficult, but here are mine:
Telecom Reform Legislation is Dead: The whole concept of national video franchising is at an end. Pretty much anything in the Stevens bill (which, despite sponsor Ted Stevens’ (R-AK) predictions doesn’t stand a chance of passing in the upcoming lame-duck session) is off the table.
Net Neutrality Dominates the Discussion: It’s weird and unfortunate that net neutrality became a partisan issue over the past two years, but it did, with Republicans fighting off any attempts to impose meaningful net neutrality requirements on cable operators and phone companies and Democrats, particularly Markey, fighting for tough regulations to bar broadband providers from favoring any content or application provider. While Markey and others will likely introduce net neutrality-type bills, most of the activity will likely be limited to jaw-boning the issue — lots of warnings and threats issued against any suspected bad activity by cable or phone companies, and so forth. The low likelihood of a net neutrality bill getting very far is reinforced by the tide of contributions from telcos and cable operators that flowed to Markey, Dingell and other Democrats as it became clear that Republicans would lose the House.
The FCC Will Become Even More Divided: Although the FCC is still Republican controlled, the stand-off over the AT&T-BellSouth merger vote is just one sign that the Commission will have a hard time issuing any but the most mundane decisions. Democratic Commissioners Michael Copps and Jonathan Adelstein are having a blast with their new-found Congressional backing (a sign of Copps’ confidence is this op-ed piece in today’s New York Times lambasting the FCC’s policies) and Chairman Kevin Martin is probably toast. As McAvoy points out, the FCC’s current campaign to relax or eliminate media ownership restrictions will probably get the kibosh from Dingell and Markey.
Hollywood’s Intellectual Property Issues Get Even More Attention: Even under a Republican-controlled House, Hollywood fared pretty well. But now, Hollywood stands an even better chance of getting ahead with its agenda to crack-down on all the lifting, mixing, matching and mashing, not to mention piracy, occuring with video on the Internet. In line to become head of the House Judiciary Committee’s Intellectual Property Subcomittee is Howard Berman (D-CA), whose district includes North Hollywood.
Of course, nothing is more unpredictable than politics and these predictions could be turned on their heads twelve months from now. And, as of 10:22 today, the fate of the Senate is still undetermined — if only two more undecided Senate races swing the Democrats’ way, the entire Congress could become Democratic controlled. These easy predictions don’t apply in a Congress that is fully controlled by the Democrats — under this scenario, it’s party time for the Dems and lots and lots of stuff kept under wraps by a bi-partisan Congress will start flying.
Posted by Cynthia Brumfield at 9:38 AM | Print | Comments (0)
I spent a good chunk of last night standing in the rain campaigning for local candidates, disconnected from the Internet and television, so I have to take it on faith that the Internet and bloggers played their predicted high-profile roles in informing the electorate of the mid-term election developments.
One hot-bed of Internet-related election activity was DC restaurant Tryst, where a group of A-list political bloggers, including John Aravosis of Americblog, John Amato of Crooks and Liars, Glenn Reynolds of Instapundit and Ed Morrissey of Captain’s Quarters, had been assembled by CNN in a “blog party,” which, was streamed both on air and on CNN’s web site. (Wonkette, however, reports that CNN’s Wi-Fi set-up didn’t work as well as the usual free Wi-Fi at the Trysts, raising the question about how well bloggers fared in the deal.)
Other bloggers helped to uncover alleged voting abuses through the day — Red State’s Eric Erickson (who dropped his pseudonym last night and let it be known that he is really a she, Victoria Gardner Coates, a professor of Italian renaissance art history boy, when I make a mistake, I make a big mistake…Eric Erickson is still Eric Erickson and presumably is a he — another writer, AcademicElephant revealed she is Victoria Gardner Coates) pointed to a video that purportedly depicts a poll observer being blocked from a voting station.
The Internet’s nascent broadband video conferencing capabilities played a key role in the coverage last night as new organizations enhanced their TV crew-produced coverage with video interviews conducted via web cams. ABC offered “field reports” from students located at 40 universities around the country, powered by start-up video calling company Sightspeed.
Last week I spoke to Sightspeed’s CEO Peter Csathy about ABC’s plans to use his company’s mostly free service to supplement its professionally produced video content. He’s pumped about the role that personal web cam videos can play in news coverage more generally. This “breaks down the barrier between the broadcasters and their audiences and allows them to bring viewers into the shows,” Csathy said.
And of course, all of the major TV news organizations had constant updates, interactive maps and other specialized coverage on their web portals.
All of this points to the biggest winner of the 2006 mid-terms elections: the Internet. Much has already been written about the role of YouTube and other new web sites in shaping voter perceptions during this election. Now, it’s clear that the Internet is also crucial in shaping professional news organizations’ coverage of election day results.
Posted by Cynthia Brumfield at 8:06 AM | Print | Comments (0)
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