The second quarter that ended June 30 was a mixed bag for Insight Communications, the ninth largest MSO in the United States. On the one hand, Insight gained 13,000 digital subscribers and 1,300 high-speed Internet customers. On the other, it lost 12,000 basic subscribers and 5,700 phone customers. The company made money--$265.5 million, to be exact--a 9 percent increase over last year, but it learned it has to watch its balance sheet, because things are tough and can get tougher.
"We believe we should assume that the current economic environment is here to stay for a while and we need to adapt to that new environment," said John Abbot, the MSO's executive vice president and chief financial officer, speaking during a conference earnings call. "We are doing that; we're not sitting still. We believe we have the ability to respond to the environment we're in."
The environment itself is a little mixed up, if for no other reason than timing. The second quarter of the year is traditionally a down time for cable operators, who lose college viewers when school ends and even some residential customers who are less interested in watching TV in the summer than the rest of the year. That, in part, accounts for why Insight gained 88,100 revenue generating units (RGUs or subscribers counted by the number of services they have) over the last year but lost 3,300 from the first quarter.
Still, Abbot said, the biggest economic impact is on the phone business and "we're making changes to adapt to what has become the new reality."
Those changes, he said, including putting an increased emphasis on profit margins as opposed to generating new revenue units--but continuing to balance the two.
"As we think about unit growth versus cash flow growth and revenue growth, we try to balance that. In some instances we may make tradeoffs for units and in other instances we may make tradeoffs for margin if we think total dollars will end up higher," he said.
- see this news release
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