Suddenlink Communications lost about 6,400 basic video subscribers in the first quarter, a marked improvement over the 35,000 customers it shed in the prior period and adding to what is becoming mounting evidence that its decision to drop Viacom’s 24 youth-oriented channels last year is having a diminished effect.
“We regained our momentum,” Suddenlink CEO Jerry Kent said on a conference call to discuss results. Suddenlink is privately held but reports results publicly as part of an agreement with its bond holders.
While Suddenlink seemed to weather the storm, another cable operator that dropped the Viacom channels saw their subscriber losses rise in the first quarter. Cable One, which dropped the Viacom channels in April 2014, said it shed about 30,000 basic video customers in the period, a 7% decline, and has seen its video customer rolls dwindle about 20% since it dropped the channels.
Suddenlink decided to drop Viacom in October amid what it called unwarranted price increase demands from the home of MTV, Comedy Central, Nickelodeon, VH1 and Spike. Suddenlink supplemented the loss of those networks by reaching deals with smaller channels that addressed the space, including PBS Sprout, Revolt TV, Byron Allen’s Comedy.TV and others.
The mid-sized cable operator shed 34,800 basic video subscribers in the fourth quarter, its first since dropping the channels.
In the most recent period, Kent pointed out that the video subscriber decline was actually less than reported and is likely due to rate increases that were implemented in March. Suddenlink counts customers in Multiple Dwelling Units (like apartments and condominiums) using the Equivalent Basic Unit (EBU) method, which takes the revenue generated from a building and divides it by the standard basic video rate for a standalone home. Even if the bulk revenue figure stays flat, because Suddenlink began implementing rate increases in March, the denominator in some cases would be larger, resulting in about 2,200 additional losses that probably shouldn’t be counted.
Also bolstering its case – churn for the period remained flat, which means that many of those losses were due to fewer gross connects, rather than an increase in customers disconnecting service.
The rest of the 4,200 lost video subscribers can be attributed to the Viacom dispute and rate increases.
The rest of the business appeared to be chugging along nicely. High-speed Internet additions rose by 34,500 in the period, and telephone subscribers increased by 9,600. Kent said that Operation GigaSpeed, its HSI upgrade program to raise speeds to 1 gigabit-per second, is well underway and it should begin offering is first 1 Gbps service by the end of the year.
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