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Flush Mediacom May Look to Buy More

Flush from last year's $380 million initial public offering
and a $640 million line of credit, Mediacom Communications Corp. chairman Rocco Commission
last week vowed to seize acquisition opportunities this year.

"There are still acquisitions to be made," the
notoriously frugal Commisso told analysts on a conference call to discuss the fourth
quarter. "We're looking every day."

Commisso added that the company has signed three letters of
intent to purchase small systems with a total of 28,000 subscribers for $48 million, or
about $1,700 per subscriber. Those buyouts should be completed by the end of the second
quarter.

In December, Mediacom closed on its two largest
acquisitions -- Triax Midwest Associates L.P. and Zylstra Communications Corp. -- paying a
combined $760 million. Those purchases added 358,000 subscribers, working out to about
$2,100 per subscriber.

Not including the Triax and Zylstra acquisitions, revenue
in the fourth quarter increased 80 percent to $68 million and cash flow rose 89.4 percent
to $34.9 million. For the year, revenue climbed 36.2 percent to $176.1 million and cash
flow was up 44.5 percent to $78.1 million.

The company finished 1999 with 747,000 subscribers, up 1.9
percent.

Commisso said the focus this year will be on upgrading
systems -- spending about $140 million to do that -- and on rolling out digital cable and
high-speed Internet access companywide.

Commisso said Mediacom is moving forward with its upgrade
plan, and 79 percent of its systems were between 550-megahertz and 750-MHz capacity at the
end of 1999. "In the past two years, we have moved from 20 percent 550- to 750- [MHz]
to 79 percent," he added.

That upgrade plan continues this year. Mediacom chief
financial officer Mark Stefan said capital expenditures for upgrades will be another $140
million, with roughly 30 percent to 40 percent of that money tied to rebuilds. The rest of
the expenditures will be to extend plant, eliminate headends and install digital headends.

Mediacom systems are primarily in rural areas that have not
been adequately served by cable in the past. Despite that, Commisso said, his systems have
not been adversely impacted by direct-broadcast satellite competition, mainly due to moves
Mediacom has made to quickly upgrade its systems as it acquires them.

Commisso said his systems also are not affected by new
federal rules that allow DBS companies to beam local broadcast signals into their markets.
For the most part, DBS companies have launched "local-into-local" primarily in
larger markets.

""Not more than 20 percent of our subscribers are
affected by local-into-local," he said. "And about 50 percent of our subscriber
base is broadcast-impaired," meaning that they would have to take at least some
cable.

The ability to offer digital service also has lessened the
blow from DBS, Commisso said. Mediacom has digital penetration rates of 9 percent or 10
percent in markets where it offers service.

Customers also are willing to pay more for quality, he
added, as is evident by Mediacom's average rate increase of 12 percent last year. He said
those rate increases -- more than double the industry average of 5 percent -- were
necessary due to the costs of revamping existing plant and expanding channel lineups.

"As we finish the rebuild, we load up the system with
significant products and services," Commisso said. "We add 10, 15, 20 additional
channels. That gives us the ability to increase rates higher than 5 percent while
maintaining a per-channel rate that is the same or lower [than the industry
average]."