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MEDIACOM COMMUNICATIONS CORP (MCCC) S-1 Filing (SEC form S1) We are the eighth largest cable operator in the United States, based on customers served by wholly-owned systems after giving effect to our pending acquisitions and recently announced industry transactions. Our cable systems pass approximately 1.1 million homes and serve approximately 740,000 basic subscribers, including our pending acquisitions. Mediacom LLC was founded in July 1995 by Rocco B. Commisso, our Chairman and Chief Executive Officer, to acquire and develop cable television systems serving principally non- metropolitan markets of the United States. Since commencement of our operations in March 1996, we have experienced significant growth in basic subscribers, revenues and cash flows. We have deployed a disciplined strategy of acquiring underperforming cable systems primarily in markets with favorable demographic profiles. Through June 1999, we spent approximately $432.4 million to complete nine acquisitions of cable systems that served 355,800 basic subscribers. In October and November 1999, for approximately $759.6 million, we acquired the cable systems of Triax Midwest Associates, L.P. and Zylstra Communications Corporation that served 355,500 basic subscribers as of June 30, 1999. On a pro forma basis, our 1998 revenues were $272.3 million and operating income (loss) before depreciation and amortization was $124.5 million. On the same basis, for the six months ended June 30, 1999, our revenues were $143.9 million and operating income (loss) before depreciation and amortization was $68.4 million. We also have generated strong internal growth and improved the operating and financial performance of our systems. These results have been achieved primarily through the introduction of an expanded array of core cable television products and services made possible by the rapid upgrade of our cable network and through the successful integration of our acquired systems. Assuming all our systems, excluding the Triax and Zylstra systems, were acquired on January 1, 1997, in 1998 our revenues grew by 13.0%, operating income (loss) before depreciation and amortization increased by 31.9%, and our internal subscriber growth was 2.5% compared to the prior year. Based on the same assumptions, for the six months ended June 30, 1999, our revenues increased by 11.5%, operating income (loss) before depreciation and amortization increased by 23.3%, and our internal subscriber growth was 2.0% compared to the corresponding period in 1998. We believe that the impact of digital technologies on video and telecommunications delivery systems, together with the emergence of the Internet as an interactive medium for communications, information, entertainment and electronic commerce, has positioned cable's high-speed, interactive, broadband network as the primary platform for the delivery of video, voice and data services to homes and businesses. We believe that there is considerable demand in the communities we serve for these new and enhanced products and services. To capitalize on these opportunities, we are rapidly upgrading our cable network to provide our customers with an expanded array of new cable television products and services, such as digital cable television, two-way, high-speed Internet access, interactive video and telephony. Currently, approximately 73% of our customers are served by systems which have been upgraded to 550MHz to 750MHz bandwidth capacity, excluding customers served by the Triax and Zylstra systems. Upon completion of our upgrade program in December 2002, we anticipate that 91% of our customers, including the Triax and Zylstra customers, will be served by upgraded systems and, as a result of consolidating our headend facilities, 84% of our customers will be served by 30 headend facilities. As part of our upgrade program, we plan to deploy over 10,000 route miles of fiber optic cable to create large regional fiber optic networks with the potential to provide advanced telecommunications services. In June 1999, we began offering digital cable services to our customers. By December 1999, we expect to offer digital cable services in systems passing more than 243,000 homes. In addition, through our strategic relationship with SoftNet Systems, Inc.'s ISP Channel, we expect to deploy two-way, high-speed Internet service in systems passing more than 155,000 homes by December 1999. Rocco B. Commisso is a highly regarded cable television veteran with over 21 years of industry experience. Prior to founding Mediacom LLC, Mr. Commisso was Executive Vice President, Chief Financial Officer and Director of Cablevision Industries Corporation, the eighth largest cable television company in the United States before its sale to Time Warner Inc. for approximately $2.8 billion. Mr. Commisso, through his ownership of our Class B common stock, has the power to elect all of our directors and control stockholder decisions immediately following this offering. In addition to Mr. Commisso, our senior management team has an average of 18 years of industry experience in acquiring, financing and operating cable systems. Business Strategy Our objective is to become the leading cable operator focused on providing entertainment, information and telecommunications services in non-metropolitan markets of the United States. The key elements of our strategy are to: . Improve the operating and financial performance of our acquired cable systems; . Develop efficient operating clusters; . Rapidly upgrade our cable network; . Introduce new and enhanced products and services; . Maximize customer satisfaction to build customer loyalty; . Acquire underperforming cable systems principally in non-metropolitan markets; and . Implement a flexible financing structure. Recent Developments In October and November 1999, we acquired the Zylstra and Triax cable systems serving approximately 355,500 basic subscribers in nine states, principally Illinois, Indiana and Minnesota. In November 1999, we finalized an agreement with SoftNet for the provision of high-speed Internet access and content services in our cable systems. Through this agreement and the upgrade plan for our cable network, by December 2002, we expect to offer two-way, high-speed Internet services to at least 900,000 homes that are passed by our cable network. In connection with this agreement, SoftNet has agreed to issue to us 3.5 million shares, representing approximately 16.2% of its outstanding common stock. In the second half of 1999, we signed five letters of intent to acquire cable systems serving approximately 28,000 basic subscribers for an aggregate purchase price of $47.7 million. These cable systems are in close proximity to our systems, thereby complementing our operating clusters. We expect to complete the acquisitions of these systems in the first half of 2000, subject to the completion of definitive documentation. Organizational Structure We are a newly formed Delaware corporation. Immediately prior to the completion of this offering, we will issue shares of our common stock in exchange for all of the outstanding membership interests of Mediacom LLC, which currently serves as the holding company for our operating subsidiaries. As a result, we will become the parent company of Mediacom LLC which will continue to serve as the holding company for our subsidiaries. | ||||||||||||
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