With all operators tarred by the accounting scandal at Adelphia
Communications Corp., cable operators are discussing development of uniform
standards for reporting some basic operating statistics to investors.
Insight Communications Co. Inc. CEO Michael Willner, who is also chairman of the
National Cable & Telecommunications Association, is orchestrating the move.
Joining him are CEOs of all of the major publicly traded cable companies, including
Cox Communications Inc. chairman James Robbins, Comcast Corp. chairman Brian Roberts and
Time Warner Cable chairman Glenn Britt.
The goal isn't to overhaul financial-accounting issues, such as how to treat
the cost of hooking up new customers -- expense it against operating cash flow
or capitalize it. That's the turf of the Financial Accounting Standards
But operators regularly put out other operating statistics that are
calculated differently by different companies. Take bulk-rate deals: If Cox or
Insight gives a 100-unit apartment building a 20 percent bulk discount, they
count that as 80 basic subscribers. Cablevision counts it as 100 subscribers.
Or operators are starting to break out "success-based" capital spending,
meaning money tied to a new revenue source. Investors don't quibble about the
$300 set-top given to a new digital-cable customer the way they worry about a
$20 million system rebuild. But what if a new high-speed Internet customer needs
new wiring? The modem is clearly "success-based." But should an upgraded "drop"
to the house from the pole be characterized as "maintenance" capital?
There's no clear right or wrong way, and the variances have been known among
analysts for years. But, given Adelphia, they're suddenly drawing scrutiny.
Willner wouldn't discuss the evaluation. But Robbins supported it: "I think it
will be helpful for everyone, especially the investors." Another operator said,
"They're talking broad strokes. None of this changes revenues or cash flow."
Executives said it could take several weeks to decide whether to move