With Q4 revenue of $561.2 million, a 2.2% increase over the prior year, Mediacom Communications marked its 100th consecutive quarter of positive year-over-year growth, entering a realm where only a handful of businesses have resided in modern business history, according to the company.

Adjusted Operating Income Before Depreciation and Amortization (OIBDA, a measure of cash flow) rose 8.2% in Q4 to $266.9 million. For the full year, revenue was up 4.3% to $2.2 billion and adjusted OIBDA increased 11.3% to $1 billion. 

While results were strong -- the increases came despite Mediacom losing 3,000 broadband customers in the period -- it was the milestone that prompted Rocco Commisso, one of the last remaining cable executives to lead the company he founded and continues to control to this day, to issue a letter to shareholders commemorating the event. In an interview, he said the last time he issued a letter to shareholders was when the company went public more than 20 years ago. 

Mediacom was formed in 1995 by Commisso, who after about 10 years as chief financial officer of CableVision Industries risked his life savings to start out on his own. He bought his first cable system in 1996 from Benchmark Cablevision in Ridgecrest, California, and now ranks as the fifth largest cable operator in the country, with about 2.6 million video, voice and data customers. 

While the cable business has had its ups and downs over the past three decades, Commisso and Mediacom have kept their eye on the ball, sidestepping for the most part the consolidation craze of the late 1990s and early 2000s, while focusing on investing in infrastructure and growing the business. 

Also: Mediacom: 20 Years of Growth 

Along the way Mediacom went public (at $19 per share in 2000, valuing the company at about 18 times cash flow); spent $2.125 billion on systems, mainly in Iowa, formerly owned by AT&T in 2001 and went private again in 2010 after the markets lost faith in the cable business in general. 

Through it all Commisso has kept his focus, expanding his network with an aggressive fiber buildout and bringing state-of-the-art high-speed services to rural communities. Mediacom deployed 1 Gigabit per second internet service throughout its footprint in 2017, staking a claim to be the first major cable company to do so. Mediacom said it has invested nearly $13 billion to fund acquisitions and to build and upgrade a national network that spans 600,000 fiber miles and serves 1.5 million customers across 22 states.   

Also: Mediacom: Standing Up for Small Cable’s Interests  

The AT&T deal in 2001 transformed Mediacom, more than doubling its size and raising its debt load to its highest level ever, about 8.3 times cash flow. Even at that level, Mediacom’s leverage was lower than some of its peers: Charter Communications at the time had a debt-to-cash-flow ratio of about 16 times. But the deal gave Mediacom the clout to begin offering high-speed data service in areas that hadn’t seen it before and positioned it for an unprecedented period of growth. Since buying the former AT&T systems in 2001, Mediacom has grown annual revenue from $885 million to more than $2.22 billion and upped annual adjusted OIBDA from $335 million to more than $1 billion.

Also: From Calabria to a Cable Chairmanship 

While that is an achievement in and of itself, Commisso is most proud of his ability to keep Mediacom’s debt low. Today the company’s leverage ratio stands at 1.2 times cash flow, among the lowest in the entire media and telecom sector. Earlier this month, Standard & Poor’s raised Mediacom’s investment grade credit rating to BBB+, higher than far-larger telecom rivals like AT&T and a feat that would have been unheard of in the sector when the company began. 

“I am pleased to say that the decision I made in 1995 to bet my life savings and my family’s future on serving neglected small communities in rural America has paid off, not only for me, but also for the thousands of employees and their families whose livelihoods depend on Mediacom’s continued success,” Commisso wrote in the letter to shareholders. “Since 2001, Mediacom has added more than 500 new positions to our highly skilled workforce, spent over $5 billion on employee payroll and made more than $500 million in 401(k) and medical benefit contributions.” ■

Cable operators smashed records in 2020, adding more than 4 million customers in the first nine months of that year, fueled in part by the pandemic. But as hopes rise that COVID-19 will loosen its grip on the country, sending more people back to offices and schools and potentially softening broadband gains, many providers are looking toward the fringes of their footprints and extending their networks deeper into less-populated areas for growth.

Extending the footprint, or making “edge-outs,” is nothing new for the industry. Many operators have occasionally extended their reach within certain territories as populations shifted or new businesses have emerged in less dense areas. But only recently have large and small operators focused on the fringe as a potential growth area, encouraged by improvements in technology and the availability of federal and state funds to extend their networks. 

It appears that 2020 was a breakout year for broadband. Residential broadband subscriptions from all providers, already rising at a healthy pace in 2019, grew by about 4.7% in Q3 2020, or 2 percentage points above the prior year, according to MoffettNathanson principal and senior analyst Craig Moffett. Overall broadband penetration grew another 2 points during the year to 85%, per Sanford Bernstein media analyst Peter Supino. 

For cable operators, the growth trajectory was even more dramatic. According to Moffett, cable broadband subscriber additions rose 50% to 1.4 million in Q3 2020. Overall, broadband subscriptions increased at a 7.4% pace, nearly 3 points higher than a year before, in Q3 2019, and the fastest growth rate since 2009, according to Moffett. 

Telco broadband providers lost nearly 1% of their customers, that sector’s best showing since 2016.

Practically every cable operator broke broadband subscriber records in 2020. Charter Communications led the pack with an astonishing 850,000 customer additions in Q2, a nearly fourfold increase over the prior year. Lockdowns and work-from-home orders, coupled with school closings across the country, increased the need for ubiquitous broadband availability. Comcast, the largest cable operator in the country, added 633,000 broadband customers in Q3, its best showing ever. Smaller operators like WideOpenWest, Atlantic Broadband and Mediacom Communications also reached milestones.

Atlantic Broadband, which has about 492,000 subscribers in 11 states from Maine to Florida, added 23,475 broadband customers in the first nine months of fiscal 2020, a 25% increase over the prior fiscal year. The company has supplemented its edge-out efforts with federal and state grants, and has also partnered with municipalities to share the cost of extending the network. And the efforts go beyond just pushing service boundaries.  

ALSO READ: Operators Put Their (Foot)print Down

“We are not only pursuing edge-outs and working to connect new subdivisions,” Atlantic Broadband spokesman Andrew Walton said in a statement. “We also are finding creative ways to connect established, previously unserved subdivisions that due to distance from existing plant would not meet traditional build criteria.  By working closely with homeowners’ associations, we have found creative ways to minimize risk, share costs and improve the rate of return on costly projects, including sharing construction costs with HOAs and obtaining service commitments from residents.”

Increasing speeds also helps boost service take rates, Walton continued, adding that more than 90% of ABB’s footprint has access to 1 Gigabit per second service. The rollout of its new managed WiFi offering also is expected to attract customer interest. 

WOW added 27,400 broadband customers in the first nine months of 2020, more than it has in all of the past two years. Mediacom added 97,000 high-speed internet customers, the largest three-quarter increase in its history.

While the early months of the pandemic drove big increases, that pace started to slacken for some operators in Q3: Charter had 537,000 broadband additions in the period. The pace is expected to have slowed further in Q4. According to Supino, Comcast should add about 515,000 broadband customers when it reports Q4 results on Jan. 28, ending the year with nearly 2 million additional customers. Charter should end Q4 with 350,000 broadband additions when it releases results on Jan. 29, adding nearly 2.5 million for the year. Altice USA, which hasn’t yet set a date to deliver Q4 earnings, should add 15,000 high-speed data subscribers in the period, pushing full-year gains to nearly 200,000.

Edge-Outs Have Surged

Charter and Comcast both have stepped up initiatives to expand their networks in the past two years. According to Moffett, footprint expansion had been flat or about 1% annually for the top four publicly traded cable operators prior to 2019. 

Charter and Comcast began to meaningfully increase that pace in 2019, though, to around 2%, adding nearly 1 million homes to their respective footprints during that year. In the first nine months of 2020, Charter added another 868,000 homes and Comcast added 764,000 homes, suggesting it should meet or surpass its previous pace. 

Part of the Charter increase can be attributed to the approval conditions for its purchase of Time Warner Cable in 2016, in which it agreed to build out about 2 million additional underserved homes across the country.   

During its Q3 earnings conference call with analysts, Charter chief financial officer Christopher Winfrey said that the overall effect of the edge-out program has been “meaningful, not material,” but he was nevertheless pleased with connection rates in those expanded areas. 

Charter has seen a “high level of consistency in terms of our ability to get to very high terminal penetrations when we build into markets,” Winfrey said. “And so, that’s what gives us confidence in our ability to go extend that investment concept.”

At the Morgan Stanley Virtual European Technology, Media and Telecom conference in November, Winfrey said that despite quarterly differences, 2020 was shaping up to be a very strong year for broadband.

“What we’ve said is that our quarterly net adds, our quarterly performance, isn’t what matters,” Winfrey said. “What really matters is the totality of the year and where are we going. And if you look at 2020, no matter what happens over the last two months of Q4, we’re going to end 2020 with a much higher amount of customers than any of us ever expected.” 

He said he was optimistic that the company’s edge-out plan will be worth the effort.

“We’re investing in areas where the economics and the payback are challenging to begin with for the first operator to come in,” Winfrey said at the Morgan Stanley conference. “There really isn't any ROI [return on investment] for the second operator to come in which means you can have a lot of confidence in terms of where your penetration ultimately will land, and we’ve seen that already. To be fair, the cash-on-cash payback for these projects is much longer than what we typically do. But the IRR [internal rate of return], because of your ability to have confidence in the penetration curve, is actually very high. We think it’s an attractive investment to make and we think there’s a bunch of other tangible and intangible benefits that we’re not even baking into our analysis.”

Comcast has kept its plans closer to the vest, but has said that driving connections by extending the network via line extensions is one of four pillars of growth.

Smaller operators are also seeing the benefits of edge-outs, and more of them are stepping up their plans. 

At WideOpenWest, edge-outs have been a key part of overall broadband growth, according to CEO Teresa Elder. In WOW’s third-quarter conference call with analysts, Elder said that footprint expansion accounted for about 1,900 of the 10,200 broadband customers the company added in Q3, its best showing in that category since Q3 2018. For the immediate future, the company said it will focus on its existing markets. 

“While it continues to be important, we are now more focused on increasing the penetration rates in current markets rather than spending additional capital to push new ones, especially during the pandemic,” Elder said. The numbers back up that strategy. On the call Elder said that broadband penetration rates in communities that were edged-out in 2018 increased to 19.6% in Q3 from 18.5% in the previous period, while rates in communities that were expanded in 2019 grew to 14.8% from 13.6% in Q2.

Economics Have Improved

Increased penetration metrics is one reason cable operators of all sizes are rethinking the decision to expand their reach. In the past, pushing the network out to less densely populated areas was too costly. But a combination of better technology and stronger rural subscriber characteristics makes extending into less populated areas more feasible.

In a research note, Moffett estimated that it can cost between $1,000 and $2,000 per home to extend fiber into an urban market. For rural markets, where the runs are longer and the homes farther apart, that cost could balloon to $4,000.

But rural markets, with fewer competitors, have a much higher opportunity to sign up passed homes for service. While 40% to 50% penetration rates could be assumed for urban builds, Moffett added, in rural markets 80% penetration rates are not unreasonable. That return on investment makes the higher costs more manageable. An urban market with a 50% penetration rate implies a cost of $4,000 per home, while a rural market with 80% penetration implies a cost that is just 25% higher, Moffett wrote. 

According to Kagan, the media research unit of S&P Global Market Intelligence, smaller markets are taking broadband at an accelerated pace. Kagan found that although there was a nearly 30 percentage-point gap in wireline broadband take rates between rural and urban markets, homes in less populated areas were increasingly signing on to service when it became available.

According to Kagan, the wireline broadband take rate in areas with 1.1 homes per mile was about 54.3%, compared to 83% in areas with 280 homes per mile.   

“Wireline broadband penetration take rates in rural America are likely impeded by limited service access due to uneconomical cable and telco deployment, inhospitable terrain or a combination of both,” Kagan determined.

But as service is deployed over time, the take rates rise. According to Kagan, broadband networks with as few as 6.8 homes passed per mile saw a 2.4 percentage point increase in the take rates between 2016 and 2019, with the largest jump (4.9 points) being in communities with 48.5 homes per mile. In the densest markets, those with 280 homes per mile, the increase was just 3.4 points. 

“Of note, the most urban group shows only the fourth-largest gains in penetration during the interval under consideration, reminding industry observers that wireline broadband maturity challenges loom,” Kagan said in
the report.

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National Cable Television Cooperative VP of broadband solutions Jared Baumann said the Kagan data points to the strong demand for reliable high-speed service in rural areas, and also signals how new products take time to take hold in small communities. He pointed to the early days of the pandemic, when many rural residents used their cellphones as hotspots for home internet connections. But as work-from-home orders dragged on, they flipped that stance.

“Now they’ve realized that when they’re home and need service, a cellular or mobile provider is not adequate for that, you really need a landline connection,” Baumann said. “More than ever you need a landline connection.”   

Smaller operators are spending big money on wireless spectrum to extend their reach, which many see as a more economical way than fiber to push broadband out to the hinterlands. 

Mediacom Communications has spent about $30 million for CBRS spectrum in federal auctions, according to senior VP of government and public relations Thomas Larsen. That additional spectrum should lead to more broadband subscribers, as the company plans to target communities that have access to high-speed data speeds of less than 50 Megabits per second, replacing it with a service with speeds of 100 Mbps upstream and 20 Mbps downstream. 

“We’re going to try to roll out a 100/20 service so that in those areas we are a significant upgrade to whatever they have today,” Larsen said. “We think we’ll do OK in those areas. That is fertile ground.” 

Funds to Add Rural Homes

Although smaller operators have used edge-outs for years, the difference today, beyond the fact that there is more and more competition from overbuilders than in the past, is the availability of government funds, like the Rural Digital Opportunity Fund (RDOF).

“In places that just would never make financial sense to build with private or corporate monies, you can supplement some of that with the funds that are coming from RDOF or other government stimulus programs,” Baumann said. “It’s great for people who live in these areas, because these areas have traditionally been vastly underserved and in some cases, unserved.”    

Mediacom has also taken advantage of state grants for broadband expansion. It received grants for about a dozen communities in Alabama, Wisconsin, Iowa, Illinois and Minnesota last year and expects to apply for more this year.

“That’s an area where I think with the $3.2 billion that went into the last round of the [federal COVID-19] stimulus, you’re going to see companies jump on board. And that can come from rural or urban areas,” Larsen said.

The RDOF program, which will hand out  $20 billion in Universal Service Fund (USF) subsidies for rural fixed broadband over the next decade, also should help grease the deployment skids. Charter was the biggest winner in the RDOF auctions, snagging $1.2 billion in awards in phase one, winning just over 1 million of the 5.2 million locations available.

At the virtual UBS Global TMT conference in December, Charter CEO Tom Rutledge said he couldn’t talk specifically about plans for the RDOF funding, because of a quiet period, but he did comment on the idea of rural expansion.  

“We think it’s good for us financially to extend our broadband network and all of our network capabilities to as many people as possible,” Rutledge said. “And we think working with the federal, local and state authorities to improve access to poles and rights of way, along with the proper subsidies, can get it done, and that we can have a bigger customer base and the communities that we serve can be expanded. 

“We think it’s smart for our company to do that,” he continued. “We think it can be done in an economically efficient way and by working with regulatory authorities, state and federal authorities, that we can expand our network and have a bigger footprint. We’ve embraced that and we’re participating in various programs around the country to expand the amount of serviceable footprint that we can reach. And we think if we do that, we’ll end up with more customers, and a happier customer and a better relationship with the total community."

Mediacom, which won about $2.5 million in phase one of the RDOF reverse auction, agreed, adding that extending the footprint not only potentially brings unserved or underserved homes into the fold, it can create new businesses.  

“Piece by piece, we’re going to inch our fiber out deeper, pick up more homes and when you combine it with the CBRS spectrum, hopefully we close massive gaps in the coverage area,” Larsen said, adding that the opportunities are huge even in states where Mediacom has a strong presence.

As an example, he pointed to Iowa, where Mediacom has large clusters in larger areas like Cedar Rapids, Des Moines and Iowa City. Outside of those markets are vast swaths of territory that are underserved.

“If you look at an Iowa broadband map, a lot of the geographic areas of the state look like they’re unserved because there is a lot of farmland,” Larsen said. “Every mile, you may have four houses or six houses. Those don’t have a wireline broadband provider today, so if we can get them a 100-Mbps wireless service quickly, that’s a new house passed.   

“Ultimately, we would love to figure out a solution, using that same wireless service, to be a provider to the farm itself as a business operation,” Larsen continued. “So, if they have water sensors or they have tractors or combines or whatever that are moving around the farm and we can connect wirelessly to them from the towers, that would be another business opportunity.”  

Mediacom Communications said it has completed the redemption of the entire balance of the $50 million outstanding principal amount of its senior notes due 2021. With the retirement of its public debt, Mediacom is no longer obligated to file quarterly financial statements publicly.

“I am proud to announce the repayment of Mediacom’s last remaining bonds,” Mediacom founder, chairman and CEO Rocco Commisso said in a press release. “Reaching this milestone is a testament to the investment grade quality of Mediacom’s financial position, highlighted by a total debt leverage ratio well below 3x and historically low average borrowing costs of 3.25%. Naturally, none of this would be possible without the hard work and dedication of Mediacom’s 4,500 employees, who have consistently produced excellent results, evidenced by the unique accomplishment of 91 consecutive quarters of year-over-year revenue growth.”

Related: Rocco Wants Privacy 

Mediacom, founded in 1995, filed for an initial public offering in 2000 and was publicly traded for more than a decade. In 2011, the company went private, claiming the public markets weren’t properly valuing cable operators.  Although it was no longer publicly traded, the company did have public debt, which required it to make quarterly filings with the Securities and Exchange Commission. Once that debt is retired, that requirement no longer holds.

Related: Rocco Seals the Deal 

“I would like to extend my sincere appreciation to our long-term bondholders for their support and trust over my 33 years of raising debt capital in the ‘non-investment grade’ markets,” Commisso continued. “I am gratified to have returned the favor by delivering an unblemished credit performance over the decades. Equally important, our banks and institutional term loan investors under the Company’s existing credit facilities continue to benefit from solid asset coverage, ample levels of liquidity and Mediacom’s robust free cash flow generation.”

Mediacom last filed quarterly results in  October -- its Q3 financials -- and reported revenue growth of 3.5% and cash flow growth of nearly 8%. The company said it may continue to issue quarterly press releases, but it is not required to do so.   

Mediacom Communications added about 9,000 broadband customers in the third quarter, helping to partially offset an increase in video subscriber losses and boost revenue and cash flow by mid-single digits.

Mediacom lost about 15,000 video customers in the period, up from the 6,000 it shed in the prior year. The company added 10,000 telephone customers, less than the 22,000 it added in Q3 2017. At 9,000 new subscribers, broadband additions were even with the previous year. Overall, customer relationships -- a mix of video, voice and data subscribers -- increased 0.2% in the period to 1.365 million from 1.362 million in the prior year.

Revenue rose 4.6% to $493.2 million and operating income before depreciation and amortization (OIBDA, a measure of cash flow) was up 6.4% to $184 million. Free cash flow was up 44% to $81.5 million from $56.5 million in the prior year, helped by a decrease in capital expenditures. Capex for the period dropped 10% to $80.7 million from $90 million in the prior year.

Mediacom is the fifth largest cable operator in the country with about 1.4 million customer relationships mostly in smaller markets in the Midwest and Southeast portions of the country. The company is privately held, but releases financial figures because it has some public debt. 

TiVo said it has renewed a product and patent license agreement with Mediacom Communications, one of its long-time MVPD partners.

Financial terms were not announced, but the extension covers a variety of TiVo products, including the TiVo Gateway DVR, TiVo Mini, “classic guide” as well as access to data analytics and other TiVo intellectual property.

The new deal will also expand beyond the traditional DVR, they said.

The agreement also enters play in the wake of TiVo’s development of a next-gen, hardware-agnostic offering that will enable MVPD partners to embark on IPTV transitions and support apps on a range of retail devices.

RELATED: TiVo Goes Device-Agnostic with New Platform for MVPDs

The renewal also gives TiVo an extension with another key cable operator partner. The most significant overhang in that business is TiVo’s failure so far to lock in a new deal with Comcast, which is engaged in patent-related battles with TiVo in the courts and at the International Trade Commission.

RELATED: TiVo Hits Comcast with More Lawsuits Targeting X1

“This expanded agreement with Mediacom underscores the value that TiVo’s innovative technology portfolio brings to the fast-growing and hyper-competitive entertainment industry,” Michael Hawkey, senior vice president and general manager, User Experience, TiVo, said in a statement. “With this agreement, TiVo will expand its relationship with Mediacom to also include our next-generation non-DVR, our next-generation user experience and conversational voice offerings. We look forward to helping Mediacom succeed in the fast-evolving entertainment market.”

“Working with TiVo, we look forward to deploying enhancements to our Xtream advanced services offering,” added John Pascarelli, EVP, operations for Mediacom. “Over the years, we’ve come to value the relationship that we have with TiVo, and the entertainment experiences they help us deploy for our customers.”

Mediacom Communications said it has begun to rollout 1-Gig broadband using DOCSIS 3.1 in Minnesota, and has identified more than 80 cities and towns that will be part of the first wave.

The deployment in Minnesota follows Mediacom’s announcement late last year that it would upgrade its network to D3.1 by the end of 2016.  The MSO has launched D3.1-based services in several markets already, including Huntsville, Ala., parts of southern Tennessee, and in its service footprint in Iowa.

RELATED: DOCSIS 3.1 Grappling with Gateway Gap

Areas included in the first wave of the rollout in April include Blue Earth County, Brown County, Carlton County, Carver County, Faribault County, Hennepin County, Itasca County, Lake County, Le Sueur County, Lincoln County, McLeod County, Meeker County, Murray County, Nicollet County, Nobles County, Pine County, Pipestone County, Redwood County, Renville County, Rice County, Scott County, Sibley County, St. Louis County, Waseca County, Watonwan County, Wright County.

Mediacom said it plans to launch 1-Gig to181 communities in Minnesota by spring/early summer 2017. The operator’s network passes 225,885 homes in the state.

RELATED: Mediacom Goes Big With DOCSIS 3.1

“Since 1996, Mediacom has invested over $8 billion of private capital in its national network to ensure that hard-working families throughout the smaller markets we serve in the Gopher State and beyond receive the same advanced communications services as America’s largest cities,”  Bill Jensen, group VP for Mediacom’s Lakes Region, said in a statement. “As a result of these investments, we are extremely proud to be adding the cities and towns we serve across Minnesota to Mediacom’s rapidly expanding list of true gigabit communities.” 

In its initial D3.1 launch markets, Mediacom has been selling a 1-Gig (downstream) service, paired with upstream speeds up to 50 Mbps, at $139.99 per month as a standalone, with a “promotional package offers” that will also be announced at a later date.  

Mediacom’s DOCSIS 3.1-based 1-Gig offering comes with a monthly data limit of 6 terabytes before overage charges are applied ($10 for each additional bucket of 50 GB of usage). 

Securing a new TV deal for the New York Cosmos soccer club isn’t the first priority for its new owner, Mediacom Communications founder, chairman and CEO Rocco Commisso, but it is definitely on the agenda.

The Cosmos, one of the better-known names in the second-tier North American Soccer League, had been tied to a rights deal with One World Sports, which has struggled on its own and is currently seeking a buyer. Commisso’s deal to acquire the Cosmos from Sela Sports and former Cosmos chairman Seamus O’Brien does not involve One World Sports.

The Mediacom chairman is now the majority owner — O’Brien retains a minority interest in the club — of the soccer team that once held court for the biggest names in the sport. Under another former media mogul, the late Warner Communications chairman Steve Ross, the Cosmos fielded teams in the 1970s with such icons as Pelé, Giorgio Chinaglia, Franz Beckenbauer and Carlos Alberto.

A lifelong soccer fan — he said during a conference call announcing the deal that he turned down a chance to join the group that purchased Italian soccer club A.S. Roma in 2011 out of loyalty to rival Juventus, his boyhood favorite team — Commisso pledged to help rebuild the Cosmos, starting with paying back wages to players and front office staff. The TV deals will come later.

“It’s crucial long-term; it’s not crucial today,” Commisso said of securing a new TV deal. “I have lots of contacts out there. It’s on the agenda to deal with the broadcasting rights and the cable rights.”

REBUILD EFFORT

Of more urgent importance are matters like putting the team back together after players were allowed to find other places to play because the Cosmos’s finances were so dire before Commisso (hailed as a savior on the call by team chief operating officer Erik Stover) stepped in. The team has only three players under contract at the moment. The Cosmos also lack a home stadium, though Commisso said the aim is to find a stadium within New York City’s five boroughs.

The NASL already has a rights deal with beIN Sports and CBS Sports Network to carry games, but some critics have said the Cosmos separate deal with OWS has hurt viewership. The fledgling NASL, a Division II league under top-tier Major League Soccer, has lost clubs over the years and has struggled to find an audience.

Currently, the NASL has contracted from 12 teams to eight, a number that Commisso hopes to grow. “I think I am getting into this situation with my eyes open,”he said on the call. “I think I bring my entrepreneurial experience, my resources, the connections I have worldwide with the financial community and the media community.”

GOAL: GROW THE LEAGUE

One of the conditions of Commisso’s deal was that the U.S. Soccer Federation affirm the NASL’s Division II status, which the governing body did on Jan. 6. The USSF also moved the third-tier United Soccer League (from which the NASL sprung in 2011) to Division II, which could fuel speculation about a future merger. The USL currently has about 30 teams.

Both leagues were granted provisional status, meaning they still have to meet requirements around the number of teams (at least 12 by the sixth year of operation), locations (at least 75% in major metro areas) and minimum financial guidelines for team owners. While USSF has granted waivers for the leagues in the past, it said it would work with NASL and USL to meet the necessary criteria.

According to reports, Division II status brings public relations and marketing benefits from the perception that play is more competitive, which also could lead to better TV deals and bigger crowds. Division-two teams also get to appear later in the Lamar Hunt U.S. Open Cup, a single-elimination tournament that includes teams from all three divisions, including MLS, as well as from amateur leagues.