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Free Cash-Flow – Cable Industry enjoys more cash in a declining customer market

Free Cash Flow – Cable Industry enjoys more cash in a declining customer market

Free Cash Flow – Cable Industry enjoys more cash in a declining customer marketWould it not seem logical that Cable Operators lose of customers should have a negative affect on the bottom line? Not so, with the latest financial reports indicating that operators are experiencing gains in significant “Free Cash flow”.

Defined as:

A measure of financial performance calculated as operating cash flow minus capital expenditures. Free cash flow (FCF) represents the cash that a company is able to generate after laying out the money required to maintain or expand its asset base.

The industry as a whole lost an estimated 1.4 million subscribers in the past 18 months which is larger than some of its smaller cable companies. Yet cash-flow has increased significantly

  • (Free Cash flow) Report (in millions):
Company FCF 1st(half) 2009 1st (half)    2008 %Chg
Comcast FCF $2,536 $1,865 36%
Time Warner FCF $1,031 $806 7.9%
Charter FCF 66 ($523) N/A
Cablevision FCF $62.5 $12.6 96.3%

 

Cable Operators have historically found it difficult to keep and add customers during the seasonal summer months and with the Telco’s becoming more in trenched within their business model, and the economy “limping along in idle”; it has been a difficult year in both keeping and growing subscribers.

The reason for all that cash coming in during this difficult time is three fold. With fewer customers to manage, operators are not spending as much to maintain those customers, and with most infrastructures built out, capital expenditures have declined significantly, and it parallels that operators are taking advantage of that previous capital spending on new services to upgrade existing customers to higher paying packages. Thus, “free cash flow” is now “king” in financial reporting.

Although capital expenditures have been significant in the past, they do not seem to match what Verizon’s Fios is implementing with its model. This is a FTTH technology that has some believing the flexibility and enhancements of this service will be a force to be dealt with in the future. Cable Operators continue to sit in the “cat bird’s seat’ with their customer clout and advanced service penetrations, but they should never believe in short-term cash flow as the answer to all ills. It will continue to be the best innovators that are able to manage both the short and long-term intricacies of customer demands.

Free Cash Flow – Cable Industry enjoys more cash in a declining customer market
Free Cash Flow – Cable Industry enjoys more cash in a declining customer market Leonard Grace (270 Posts)

Founder of Broadband Convergent, a Broadband-Mobile-Cable-Wireless-Telecom market website focused on highlighting industry news and strategic issues within technology arenas. Highly researched and experienced insights and trends both inform and enlighten readers on current industry convergence of Broadband-Cable-Mobile-Wireless and Telecom Sectors.

Free Cash Flow – Cable Industry enjoys more cash in a declining customer marketFree Cash Flow – Cable Industry enjoys more cash in a declining customer marketFree Cash Flow – Cable Industry enjoys more cash in a declining customer marketFree Cash Flow – Cable Industry enjoys more cash in a declining customer marketFree Cash Flow – Cable Industry enjoys more cash in a declining customer marketFree Cash Flow – Cable Industry enjoys more cash in a declining customer market