Century and TCA Cable Announce Earnings

Joshua Cho

New Canaan, Conn.-based Century Communications Corp. last week said that it had increases in second quarter consolidated operating performance but posted higher losses from continuing operations. The announcement came just a few weeks after Century said it was seeking "strategic alternatives" with the help of investment bank Donaldson, Lufkin & Jenrette (DLJ).

Without an analyst or media conference call, Century simply issued a statement saying that its second quarter results reflect the sale of two of its business segments-Centennial Cellular Corp. and the company's Australian pay TV operations.

Excluding those businesses, Century reported second quarter revenues of $129.7 million, a 6.9% increase over the comparable period of the previous year. Operating income before depreciation and amortization was 55.5% of revenues, or $71.9 million, a 14.4% increase on a year-over-year basis.

However, Century posted a second quarter loss from continuing operations of 33 cents per share compared to the 28 cents per share loss posted in the second quarter of last year. The company also said its net loss for the quarter was $25.1 million, or 33 cents per share, compared to a net loss of $43.6 million, or 60 cents per share, in the same period last year.

A week before Christmas, Century issued a statement that simply said that the company had enlisted the services of DLJ to assist the MSO in "exploring strategic alternatives available to the company."

Specifics from the companies were not forthcoming and company officials could not be reached last week for comment. However, analysts believe that the company is actively seeking a buyer and, by issuing a statement, is publicly acknowledging that fact.

Although Century chairman Leonard Tow has said in the past that the company was not for sale, the operator's shedding of the cellular and pay TV assets suggested to many that the MSO was preparing to be bought.

Because of a 75%-owned partnership with Tele-Communications, Inc., Century is the largest operator in Southern California with some three quarters of a million subscribers there. Company officials have said as recently as last month that the company was currently in talks with AT&T Corp. to offer bundled service in the Los Angeles region, making it a very attractive property for players such as Paul Allen, who is in the process of building a 10 million subscriber MSO.

By Century's own count, it has some 1.3 million subscribers located in 25 states and in Puerto Rico, making it the ninth largest cable operator in the U.S. Its most significant systems are located in Los Angeles, Colorado Springs, Colo. and Puerto Rico.

Pumped up by better-than-expected fourth quarter earnings, TCA Cable TV, Inc.'s president Fred Nichols was eager to talk up the company's Internet and telephony plans.

Speaking at a Jan. 8 media conference call to discuss the results, Nichols began by saying, "It seems that most of the questions I'm receiving now are about what we're doing in the Internet and telephony businesses."

In terms of the Internet, the company plans to have high-speed cable modem service in 18 markets, or roughly half of its homes passed, by the end of this year. To offer such services, Nichols said that TCA plans to have 90% of its plant two-way capable by the year 2001. Only 15%-18% of the plant is currently two-way.

While TCA actively pursues the Internet business, it seemed to take a more passive approach to telephony, relying instead on its partnership with Tele-Communications, Inc. and the pending merger of that company with AT&T Corp.

"We are going to have the opportunity to talk to them (AT&T) about aligning for telephony," Nichols said.

As far as rate increases, TCA plans to raise rates by 3%, Nichols said. However, the company is looking forward to March when current federal rate regulations are lifted, which will allow TCA to "unwind" some of the upper tiers, Nichols believes, and "eliminate the use of analog converters as much as possible."

Nichols said that TCA is seeing $16 incremental revenue from its digital customers but would rather wait until March so that it can realign channels before a full-blown rollout.

"It's a product that we think is going to be good, but we don't want to rush in there before the rate regulations" go away, Nichols said.

For the fourth quarter ended Oct. 31, TCA had its revenues increase to $106.7 million, a 33.7% improvement over the same period of last year. Of that, 18.4% was from internal growth in cable systems; 59.5% was in cable system acquisitions; 22.8% was from TCA's advertising insertion business; and 3.5% was from the Internet business. For the year, the company saw its revenues grow 25% over the prior year to $385.7 million.

EBITDA for the quarter was up 36% to $44.6 million on a year-over-year basis. For the year, EBITDA was up 24% to $160.1 million when compared to the prior year.

ALSO: Adelphia Communications Corp. said on Jan. 11 that it had sold 4 million newly issued shares of class A common stock to investment bank Goldman, Sachs & Co. for $43.25 per share. The sale of the shares came from Adelphia's shelf registration statement. At the same time, family members of John Rigas, Adelphia's chairman, entered into an agreement to buy the same amount of shares for the same price.

Proceeds from these sales, the company stated, will go toward repayment of subsidiary bank debt. The sale is expected to close Jan. 14.

C-COR Electronics Inc., which designs and makes two-way HFC networks, said on Jan. 11 that it expects stronger than expected second quarter results, which are due to be released on Jan. 20. Company president and CEO David Woodle said in a prepared statement that he anticipates beating First Call Corp.'s estimated 16 cents per share projection for the company.

The company also said that it had record bookings for the second quarter, beating the previous record of $44.7 million, which was posted in the second quarter of '95.