Cox second-quarter profit falls 47 percent

Thursday, July 29, 2004 | 10:45 a.m.

SUN STAFF AND WIRE REPORTS

Cox Communications Inc., the fourth-largest U.S. cable-television operator, today said second-quarter profit fell 47 percent as gains from selling its stake in Sprint Corp. declined.

Net income dropped to $62.7 million, or 10 cents a share, from $117.7 million, or 19 cents, a year earlier, Atlanta-based Cox said in a statement. Cox sold a remaining stake in Sprint for $2.3 million during the quarter, 98 percent less than its $124.1 million gain a year earlier. Revenue rose 12 percent to $1.6 billion on higher sales of digital-TV and Internet access.

Cox is the dominant cable television provider in the Las Vegas Valley and has more than 1,100 local employees.

While the company does not give customer totals, the National Cable & Telecommunications Association said that as of March the Las Vegas Cox system was the third largest in the nation with 410,946 basic cable customers. That comes in ahead of Cox's systems in San Diego and Tempe, Ariz.

The Greenspun family, owner of the Las Vegas Sun, is a minority investor in the Cox system in Las Vegas.

Cox boosted sales of Web access by 28 percent and phone service by 24 percent in the quarter as Chief Executive Jim Robbins, 62, provided discounts to customers who subscribed to a bundle of services to stem customer defections. The company said it lost 53,647 basic cable-TV subscribers to competitors such as DirecTV Group Inc.

"That was the one fly in the ointment that might disappoint some investors," Matt Harrigan, an analyst at Janco Partners Inc. in Denver, said in an interview. He doesn't own Cox shares and rates the stock as "buy." "Their bundling numbers are very impressive, that's how you maximize revenue per home," he said.

Cox's customers for its basic cable-TV package, which provides channels such as Walt Disney Co.'s ESPN and Viacom Inc.'s CBS, during the second quarter declined to about 6.26 million basic subscribers.

In April, Cox sold cable systems with another 54,000 customers in Oklahoma, Kansas, Texas, Missouri and Arkansas for $54.6 million in cash to Allegiance Communications LLC. Those customers were divided among 70 different systems, Niraj Gupta, an analyst at Citigroup Inc. in New York, said in a research note on July 18. He rates Cox "buy."

The two biggest U.S. cable-TV operators, Comcast Corp. and Time Warner Inc., yesterday said they lost 96,000 and 21,000 basic cable-TV subscribers, respectively. Comcast has about 21.4 million subscribers and Time Warner Cable has 10.9 million.

Cox earlier this year began offering most of its customers three packages of high-speed Internet service, with prices ranging from $25 to $80 a month, to compete with lower-priced products such as Time Warner Inc.'s America Online dial-up Web access and SBC Communications' DSL service.

The cable operator added 97,517 high-speed Internet customers to end the quarter with 2.25 million users.

Cox, which began selling telephone service in 1997, has 1.13 million subscribers for its calling plans. In December, the company began selling phone service using so-called Voice Over Internet Protocol technology in Roanoke, Va.