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K.C. Neel
Adelphia Communications Corp. is in the final throes of buying Galaxy Cablevision Inc., which will give the Coudersport, Pa.-based MSO a total of 2.4 million customers.
The Galaxy systems, which are located in rural areas and average about 700 subscribers per headend, are expected to sell for around $2,000, according to industry observers. That's well below some of the higher-profile deals announced recently including Cox Communications Inc.'s purchase of TCA Cable TV Inc., which sold for $4,115 a customer.
Galaxy may be small, but it hasn't been shy about launching new services including digital. Indeed, Galaxy was one of the first MSOs to launch digital services to customers over a year-and-a-half ago. The company's Booneville, Miss., system, which counts some 3,400 customers and is one of Galaxy's largest properties, has a 22% digital penetration rate.
That could bode well for Adelphia, which is beginning to roll out digital services in a meaningful way. The company reported a 95% lift in digital revenues to $4.1 million the second quarter and a 427% lift in customers to 72,032.
Adelphia has been aggressive in its acquisition of cable systems this year. That surprised some cable observers who assumed the MSO would be gobbled up itself. Since the beginning of the year, Adelphia has agreed to buy Century Communications Corp., FrontierVision Parners L.P. and Harron Communciations Corp. The company expects to formally announce the Galaxy deal within a month.
Adelphia reported pro forma second-quarter revenues of 289.9 million, up almost 20% from the same period a year ago. Pro forma operating cash flow for the three months totaled $126.7 million, up 9% from the same period a year ago. Operating cash flow margins remains steady, but capital expenditures rose 54% to $73 million. Adelphia's net loss applicable to common stockholders for the second quarter totaled $47.3 million, or 81 cents a share, compared with $48.3 million, or $1.56 a share, for the same period in the prior year.
The company's internal growth year-over-year was almost 2% to 2.26 million customers. Adelphia's Power Link Data subscriber count rose 140% from the same time last year to 22,180. Giving pro forma effect to all significant transactions which have closed as of August 16, quarterly revenues and operating cash flow both grew about 9% over year ago totals to $192.1 million and $102.1 million, respectively.
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