Cable One loses another 13K residential video subs, gets ready to tack on a $5 retrans fee

Cable One continued to move away from video growth, losing nearly 13,000 pay-TV customers in the first quarter as it preps to start charging TV customers $4.96 a month starting in June to help offset broadcast retransmission fees. 

The Phoenix, Ariz.-based MSO has lost 17.2 of its residential TV video base in the last year, about 70,000 customers, and now has only 336,524 video customers left. Revenue from residential video services dropped nearly 15 percent to $74.85 million.

Cable One has been aggressively touting its focus on high-speed Internet, which it says yields significantly improved margins over video. But the MSO only added 6,100 residential data users in the fourth quarter. And it's only grown its residential HSI base by 2.2 percent over the last year, adding 10,181 customers for a total of 467,077. However, residential data revenue was $83.4 million, an increase of 20.8 percent year-over-year.

Total revenue was flat in the first quarter at $202.8 million, but Cable One touted a 14.2 percent increase in adjusted EBITDA to $85.3 million, with capital expenditures declining 13.6 percent year-over-year to $27.4 million — the result of declining video programming costs. 

Cable One CEO Thomas Might was asked by an investment analyst during the Q&A portion of the today's earnings call why his MSO only has around 31 percent penetration on HSI in the markets it serves. 

"Suddenlink, Mediacom and Cable One almost always have lower penetration because we're mainly rural," he said. "Cablevision is the opposite extreme because it's mainly urban."

Media analyst Craig Moffett of MoffettNathanson says the MSO's HSI business should be growing faster. 

"For a company that has spun a broadband-not-video story, Cable One's broadband subscriber results have been mediocre at best," Moffett said in a note to investors. "They have made up for the weakness in units with huge price increases. Cable One's broadband subscriber base has been growing in the low single digits (just 2.4 percent in the just-reported first quarter), a good six points below the growth rate of their mega peers. Their data ARPU, on the other hand, has soared (up 18.1 percent year over year), a good 15 points above the growth of the big boys.  After five years of no price increases, they took an across-the-board $5 rate increase in October.

"Does that deserve the same multiple as the more sustainable growth patterns at Comcast or Charter?" Moffett asked.

For more:
- read this Cable One earnings release

Special report: Tracking pay-TV earnings in Q1 2016

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