Small midwest cable operator Insight Communications issued selected Q2 08 financial and operating results (PDF) this morning and, in what is clearly becoming the surprising but so far consistent trend of this earning's season, posted strong subscriber growth across the board.
During the quarter, Insight, which serves around 700,000 core video customers in Kentucky, Indiana and Ohio, accelerated its growth in basic, digital, high-speed and voice customers. Insight added a net 3,800 basic customers, up from the 2,640 net adds during the year-ago quarter, to wrap up Q2 with 692,800 basic subscribers, representing around 53% of homes passed.
The operator added 9,200 digital video customers, up from the 9,000 net digital video adds during Q2 07, ending the quarter with 406,100 digital subscribers representing 61% of digital capable homes passed.
High-speed data advanced to 12,400, up from 11,300 net broadband adds during Q2 07, giving Insight 424,600 total broadband subscribers, representing 33% of broadband-enabled homes passed, by quarter's end.
Telephony net adds climbed to 18,700, up from the 10,500 net voice service adds during the year-ago quarter. Insight ended the quarter with 230,300 voice subscribers, representing a 19% penetration rate.
Insight's revenues rose 16% year-over-year to $214.8 million, while cash flow grew by 15% to $17 million.
Insight is the third operator in a row to post healthy Q2 08 customer gains (and is the only cable operator so far to post accelerating gains across the board) in the face of what should be market share erosion as phone companies, specifically AT&T and Verizon, ramp up their video competition initiatives. Not only have these cable operators seemingly checked the telco incursions into their core video businesses, but they have also continued to make healthy inroads into the phone companies' own core voice businesses while maintaing strong growth momentum in high-speed data subscriptions even as growth in telco-delivered broadband services has dramatically dropped.
Posted by Cynthia Brumfield at 5:10 PM | Print | Comments (0)Cablevision Systems today won its appeal of a lower court ruling that banned the cable operator's use of a networked or remote storage DVR (RS-DVR), handing Hollywood a big defeat in its effort to stamp out what could be a particularly cost-effective and popular method of recording programs. In its decision (PDF), the U.S. Court of Appeals for the Second Circuit said that the District Court for the Southern District of New York erred in ruling that the RS-DVR, which enables customers who do not have a stand-alone DVR to record programs on hard drives maintained by Cablevision, directly infringes the copyrights of program creators and remanded the case back to the lower court.
The court said that even though Cablevision set up a complex system that supports the remote recording, that system is basically akin to a VCR, the manufacturers of which were held free from infringment liability in the Supreme Court's landmark Sony Betamax case. Writing for the court, Judge John M. Walker said that "We do not believe that an RS-DVR customer is sufficiently distinguishable from a VCR user to impose liability as a direct infringer on a different party for copies that are made automatically upon that customer’s command."
It is the customer, and not Cablevision, that is making the copy Walker wrote, and therefore Cablevision cannot be directly infringing upon the programs' rightsholders.
Here, by selling access to a system that automatically produces copies on command, Cablevision more closely resembles a store proprietor who charges customers to use a photocopier on his premises, and it seems incorrect to say, without more, that such a proprietor “makes” any copies when his machines are actually operated by his customers.
But, the court did seem to hold open the idea that Cablevision's contribution to the creation of an infringing copy is so great that it might, in some other case with different arguments, be held liable for direct infringement. Walker wrote:
We need not decide today whether one’s contribution to the creation of an infringing copy may be so great that it warrants holding that party directly liable for the infringement, even though another party has actually made the copy. We conclude only that on the facts of this case, copies produced by the RS-DVR system are “made” by the RS-DVR customer, and Cablevision’s contribution to this reproduction by providing the system does not warrant the imposition of direct liability.
The court also held open the door that Hollywood could arge that the RS-DVR is responsible for contributory, as opposed to direct, infringement.
We do not address whether such a network operator would be able to escape any other form of copyright liability, such as liability for unauthorized reproductions or liability for contributory infringement.
Nevertheless, the decision was decisively in favor of the networked DVR and Cablevision hailed it as a victory for consumers. "This is a tremendous victory for consumers, which will allow us to make DVRs available to many more people, faster and less expensively than would otherwise be possible," Cablevision COO Tom Rutledge said in a statement.
Posted by Cynthia Brumfield at 2:04 PM | Print | Comments (1)In the clearest sign to date that DBS multichannel video is a dying service, Dish Network issued its Q2 08 earnings report this morning showing its first-ever loss of subscribers. From Q1 08 to Q2 08, Dish lost 25,000 net customers, wrapping up the quarter with 13.79 million customers.
Despite this, EchoStar posted a 9% year-over-year rise in subscriber-related revenue due to rising average revenue per subscriber and a nearly 50% hike in net income, thanks to cost-cutting. Subscriber revenue rose to $2.88 billion, up from $2.76 billion a year ago and net income jumped to $335.86 million, up from $224.19 million.
Although EchoStar is admittedly the weaker of the two main U.S. DBS providers, DirecTV, which issues its earnings report on Thursday, this news doesn't bode well for DirecTV.
Posted by Cynthia Brumfield at 12:27 PM | Print | Comments (0)
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