Priced Out: Knology Endures Subscriber Erosion

Top-20 cable operator Knology chalked up subscriber erosion at the end of last year to a price increase, saying it badly misjudged what its markets could bear. The company cut prices last spring, then moved to boost them at a rate that ran as high as $25 a month for some customers.

"I think we whiffed on our pricing program," said CEO Rodger Johnson.

The company lost about 3,600 TV customers from its "legacy" business in the recently completed fourth quarter. It began the quarter with more than 234,000.

The figures do not include results related to a $165 million acquisition of Kansas' Sunflower Broadband, pushing Knology's video footprint to 255,000 homes at the end of the year.

The figure is set to climb as Knology announced a $30 million deal to acquire Cobridge Communications operations in one Alabama and one Georgia market, which are adjacent to existing operations. The homes were served by Charter Communications. The deal is set to close by the end of the second quarter.



In addition to raising prices, Knology said in the October-December period, it suffered from an aggressive promotion from a competitor in one market, where it felt it would be fiscally unsound to match the lower pricing.

Company-wide, with prices now "readjusted," CEO Johnson said on an earnings call that subscriber rates have picked up in January -- although they are still slower than years past. That trend has continued into February, putting the company "hopefully back on track."

Not accounting for the Sunflower acquisition, Knology posted 5.5% revenue growth in the quarter. Overall revenue was $123.6 million, including the acquisition. By one measure, net income was $5.5 million.

Next story loading loading..