WOW shares spike nearly 30% after $25M stock buyback plan announced

WOW
In addition to a $25 million stock buyback plan, WOW said today that Crestview Partners would buy another $25 million of its shares. (WideOpenWest)

The announcement of a $25 million stock buyback plan helped send shares of Englewood, Colorado-based cable operator WideOpenWest up more than 28% and climbing as of midday trading Friday.

This morning, WOW reported a 4.8% revenue slide to $285.5 million for the first quarter. The operator reported a net loss of $202.7 million, compared to net income of $72.4 million in the first quarter of 2017. The declines were actually better than investment analysts had predicted. 

Subscriber numbers were solid for WOW. Pay TV subscribers declined by 7,700, compared to a loss of 12,400 in the first quarter of last year. Residential high-speed internet users increased by 8,700, excluding those gained by WOW’s ongoing “edge-out” strategy. 

FREE DAILY NEWSLETTER

Like this story? Subscribe to FierceVideo!

The Video industry is an ever-changing world where big ideas come along daily. Cable, Media and Entertainment, Telco, and Tech companies rely on FierceVideo for the latest news, trends, and analysis on video creation and distribution, OTT delivery technologies, content licensing, and advertising strategies. Sign up today to get news and updates delivered to your inbox and read on the go.

Business services revenue increased by 14.6% year over year. 

Regardless of whether they hit—or even exceeded—their forecast marks, as WOW did with subscribers Friday, U.S. cable companies have largely been hammered on Wall Street in recent months. 

RELATED: Deeper Dive—Is there any cure for the cable flu?

MoffettNathanson analyst Craig Moffett has suggested the primary reason is that operators aren’t doing what publicly traded companies in their advanced stages of their lifespan are expected to do by investors—return free cash, as WOW said it would do today.

“As the growth of the cable (and satellite) business slows, and as capital intensity falls (and margins rise), this will be, or at least should be, a period of rapid free cash flow (FCF) release for pay TV distributors,” the analyst said. “The appropriate strategy for companies in this stage of their life cycle is to return that cash to shareholders.”

In addition to the buyback, Crestview Partners announced that it will purchase an additional $25 million in WOW stock. 

“We are encouraged by the progress we’ve made,” said Teresa Elder, who took over as CEO for WOW late last year. “WOW returned to positive organic HSD RGU growth, and we have begun investing in our strategic initiatives in sales and marketing, customer care, and digital transformation. We’re still early in the process, but we are executing on our vision of connecting people to their world through the WOW! experience by being reliable, easy, and pleasantly surprising, every time.”

Suggested Articles

Amazon Prime Video and Netflix have dominated the SVOD market, and both have expanded globally—strategies that are paying off for both companies.

Ad-supported streaming service Xumo has already been growing its monthly user base, and now the company is setting an ambitious goal for increasing streaming…

Verizon Media is opening a 5G production studio in Los Angeles in cooperation with the company’s immersive media firm, RYOT.