Declining Pay TV Set-top Biz Remains an Albatross for Top Cable Tech Vendor CommScope

A legacy Arris set-top box
(Image credit: CommScope)

Eighteen months after it first announced plans to spin off its struggling division that makes pay TV set-top boxes and home internet gateways, telecom tech vendor CommScope said it'll remain stuck with its Home Networks unit for the foreseeable future. 

Speaking to equity analysts late last week during CommScope's third-quarter earnings report, CEO Chuck Treadway said the company will now implement a "transformation plan" for Home Networks, as the divisions remains vexed with issues ranging from a sustained global chip shortage to the negative impacts of foreign exchange rates. 

Beyond that, Home Networks has been challenged by shrinking demand for so-called "Customer Premises Equipment" (CPE), with pay TV set-top box sales declining for the better half of the last decade, and internet gateway demand starting to drop, too. 

Revenue for CommScope's Home Networks division was down 6% in Q3 to $391 million. Adjusted EBITDA did improve from a loss of $16 million a year ago to a loss of $5 million in the most recent quarter. 

Also read: Mediacom Selects CommScope as Primary Tech Vendor as It Switches Network to Distributed Access Architecture

With cable operators ramping up their network technology purchases ahead of a major upgrade cycle, net sales were up 28% in Q3 to just over $1 billion in CommScope's core business sector, "Connectivity and Cable Solutions." Adjusted EBITDA was up 55% year over year to $188 million. 

But investors reacted to the news about the Hickory, N.C.-based tech company's inability to spin off Home Networks into a stand-alone publicly traded company. (Notably, CommScope CPE rival Technicolor just spun its set-top business (opens in new tab) out into a new public offering called Vantiva.)

CommScope shares are down nearly 27% from late last week. ■

Daniel Frankel is the managing editor of Next TV, an internet publishing vertical focused on the business of video streaming. A Los Angeles-based writer and editor who has covered the media and technology industries for more than two decades, Daniel has worked on staff for publications including E! Online, Electronic Media, Mediaweek, Variety, paidContent and GigaOm. You can start living a healthier life with greater wealth and prosperity by following Daniel on Twitter today!