TCI's Cable Unit Reports Cash Flow, Revenue Rose
April 26, 2011
Tele-Communications Inc.'s core cable unit posted increased cash flow and revenue for the second quarter, due largely to an increase in subscribers and nonregulated revenue, but its loss for the quarter widened. TCI Group, the publicly traded stock that includes the company's cable systems serving 14 million subscribers, reported a 30% gain in revenue to $1.72 billion from $1.32 billion a year earlier. Cash flow, regarded as a primary indicator of a cable company's health, grew 3% to $525 million from $509 million. Cable companies define cash flow as earnings before interest, taxes, depreciation and amortization. TCI Group posted a loss of $188 million, or 29 cents a share, compared with a loss of $95 million a year earlier. TCI couldn't provide a comparable per-share figure for the year-earlier quarter, largely because the company reorganized assets in August 2010, including the introduction of the Liberty Media Group tracking stock. The company said its loss for the quarter widened because of debt associated with TCI's stake in a wireless telephone venture with Sprint Corp., early retirement of debt and losses associated with Chamberlain! programming service, which is 50.1%-owned by TCI. Aside from growth in cable customers, TCI Group also benefited from an increase in customers at Primestar Partners, a direct-broadcast satellite business partly owned by TCI Group. TCI plans to spin off its stake in the satellite operations later this year. The results for the Engelwood, Colo., cable company were in line with analysts' expectations. In composite trading on the Nasdaq Stock Market, TCI Group's shares fell 50 cents to $15.25. TCI, the parent company, posted revenue of $2.02 billion for the quarter, up 23% from $1.65 billion a year earlier. Cash flow for the parent company increased 10% to $563 million from $511 million. TCI's Liberty Media programming unit, which is traded under a tracking stock, reported revenue of $322 million, down 6.1% from $343 million a year earlier. Liberty swung to a gain of $4 million this year from a loss of $12 million in the second quarter last year. TCI officials said the company expects strong revenue growth in the third and fourth quarters, since it deferred all allowable rate increases through the latter part of June under an agreement with the Federal Communications Commission. Moreover, TCI, along with other major cable operators, plans to start rolling out new products, such as on-line data services and digital cable boxes that are capable of receiving hundreds of channels, in the second half. Separately, British Broadcasting Corp. and Flextech PLC are discussing a joint venture that could give the BBC access to the U.S. market through new cable channels and Flextech access to at least some of the BBC's vast program archive. Flextech, a European cable and satellite programmer, is controlled by TCI. While the BBC long has sought ways to enter the American market other than selling programming to others, the respected United Kingdom state-owned broadcaster has yet to make a major move into the U.S. A venture with Flextech -- and its parent, TCI, the biggest cable operator in the U.S. -- would give the BBC the distribution pipeline it has lacked. A BBC spokesman emphasized that the discussions are at a ``preliminary'' stage, and that the BBC also is holding talks with others.
