Cox Profits Fall Due to Rising Expenses (1 Viewer)

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* Growth in Cox Communications' Internet-access business boosted revenues, but costs grew faster.

* * *

Cox Communications says its profits for its cable and Internet- access operations in Rhode Island last year totaled $8.71 million, compared with a net loss of $137.4 million in 2004.

But the company's profit before income taxes was $15.4 million, down 45.2 percent from $28.1 million in 2004 as expenses grew faster than revenues, according to a filing the company made to state regulators on Friday.

Cox is the dominant cable provider in Rhode Island, with 302,763 customers as of the end of last year. The company is normally secretive about its financial and customer information, but it and other cable firms are required to disclose financial statements each year to state regulators, giving the public a rare glimpse into their operations.

Even though the number of subscribers to basic cable service was virtually unchanged last year, Cox's revenues grew 9.1 percent to $262.3 million in 2005. But expenses grew faster, climbing 16.6 percent last year.

(Cox's telephone revenues are not included because the company is not required to disclose those figures in its cable filing.)

The increase is largely due to growth in Cox's Internet-access business, as well as an increase in charges for premium channels, according to the filing.

Data revenue and equipment-rental charges were $89.3 million, up 21.7 percent from $73.4 million in 2004.

Salaries and benefits for employees and the cost of buying programming were the two biggest expenses. Salary costs were $78.7 million, up 8 percent from $72.9 million in 2004. Programming was $74.5 million, up 11.3 percent from $67 million in 2004.

Full Channel Cable TV of Warren, the only other major cable operator in the state, said it had a net loss last year, the first time the company has lost money since Cox began competing with the firm in 2002.

Both companies now offer cable, telephone and Internet service in Barrington, Bristol and Warren. These are the only communities in Rhode Island where customers have a choice of cable providers.

Full Channel's net loss for the fiscal year that ended September 2005 was $522,000, compared with a net profit of $125,000 in the 2004 fiscal year.

Full Channel reported that it continued to lose customers last year. It had 7,229 subscribers as of September, down 7.9 percent from September 2004.

At the same time, Cox said it has added customers in the three- town service area. It reported having 6,860 customers at the end of last year, up 17 percent from 2004.

The loss of customers for Full Channel has cut into its revenues. Total subscriber revenues for fiscal 2005 were $5 million, down 4.9 percent from $5.3 million in 2004.

Despite the decline in customers, Full Channel is growing its telephone, Internet-access and digital-cable businesses.

Telephone revenues were $47,000, up 408 percent from $9,000 in 2004.

Internet revenues were $824,000 last year, 11 percent higher than $742,000 in 2004. And digital-cable revenues were $183,000, up 27 percent from 2004.

tbarmann@projo.com / (401) 277-7369

(c) 2006 Providence Journal. Provided by ProQuest Information and Learning. All rights Reserved.

Source: Providence Journal

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