A Barron's mention can cause a pop on Monday.
TCI starts marketing Digital Video....................
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Solid TCI Earnings Despite Sub Losses: MSO Steps up Marketing
TCI [TCOMA] blamed a "pitiful" marketing effort during Q1 for losing 112K subs during Q2, but says it will make up the losses by spending more than $100mln on marketing and advertising by the end of '97. MSO pres Leo Hindery announced the sub losses Friday as TCI reported an impressive $706mln in Q2 cash flow on $1.545bln in revenue. Hindery called TCI's $14mln in marketing expenditures during Q1 "unacceptably low." He says TCI spent $25mln on marketing during Q2, and plans to spend $53mln during Q3 and $53mln during Q4 to attract new subs. "We know how to market cable subs around here," Hindery said during a conference call. "We just didn't do it." Hindery said 39K to 49K of the losses came from endemic churn, while the remainder was composed of seasonal disconnects. Wall Street reacted positively to TCI's earnings, sending stock in TCOMA up 7/16 to close at 18-1/16. Analysts said they were impressed that Hindery was able to reduce TCI's total debt to $13.6bln, dropping the MSO's debt-to-cash ratio to 5:1. Never a shy public speaker, Hindery put the DBS players on notice when he said "I will kill if I lose one more subscriber to satellite." And it would have been worth money to see the look on the faces of his PR team when Hindery later told a reporter, "If I don't ad subs in the fourth quarter, I'm going to kill myself." On his own account, Hindery told analysts earlier that TCI will lose up to 85K during Q3, but will "storm back" during Q4, which is typically a strong quarter for all MSOs. On the digital front, Hindery reiterated that TCI will pass 90% of its 14.4mln HHs with digital cable by year-end, but will begin marketing digital TV to only 2/3 of its markets. He said those systems that won't be pitched digital are those where TCI recently launched joint ventures. |
