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U.S. Cable MSOs are Picking Up Momentum

According to Mediaweek, they�re still a long way from the hearts-and-flowers stage of the relationship, but it appears that after years of studied indifference, Wall Street has begun to cozy up to the major cable TV operators.

The change of heart comes on the heels of a record quarter for the industry, as the top multiple-system operators (MSOs) reversed a six-year trend by adding basic video subscribers in the first quarter of 2006.

All told, cable added more than 220,000 basic subs in the quarter, thanks in large part to aggressive pricing initiatives that some observers said are designed to boost share prices. �Cable is clearly responding to Wall Street,� said Bruce Leichtman, president at Leichtman Research Group, who added that while the MSOs have their eyes on bigger game, meeting analysts� demands was easier than arguing the point any further. �There�s nothing to it. They just give it away.�

And while cheap bundles are boosting the rolls�introductory packages of low-end video, high-speed Internet and voice are now widely offered at price points of $100 and under�reversals at two cable operators in particular have had a profound impact on the overall numbers. �Around 75 percent of the basic subscriber losses in the last few years were from two companies: Charter and Adelphia. So once you stop bleeding at those companies, the whole industry begins to level off,� said Leichtman. As recently as the fourth quarter of 2004, both Charter and Adelphia combined for a net loss of 186,000 subs, Leichtman said. In first quarter 2006, Charter added more than 29,000, while Adelphia dipped slightly (2.1 percent) versus a year ago.

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