Cox Playing Hardball on Sports TV

Cox Communications (COX Quote) CEO Jim Robbins indicated Tuesday he was willing to drop a major sports programming channel from his company's systems should he be unable to reach a satisfactory affiliation agreement.

But Robbins, who has been the cable industry's most vocal combatant in a battle over rising programming costs, said that Cox had good negotiations going on with one of two major sports programmers, though he wouldn't say which one.

Robbins' comments, coming during Cox's conference call with analysts to discuss third-quarter financial results, puts the spotlight on one of the cable industry's hottest buttons in the past few months: the rising cost of sports programming, and that trend's impact on cable television pricing.

Robbins has previously complained about price increases sought by Disney's (DIS Quote) ESPN and News Corp.'s (NWS Quote) Fox Sports Net. And last week, the General Accounting Office issued a report fingering sports programming costs as a key culprit behind rising cable TV subscription rates.

On Tuesday, Cox's shares rose 78 cents to $34.08, following Cox's release of stronger-than-expected results for the third quarter and raised guidance for full-year 2003.

Seasoning

The numbers for the Atlanta-based cable TV operator not only reflect Cox's success in getting signups for advanced services, but also corroborate analysts' suspicions that second-quarter weakness was the result of seasonal conditions rather than a permanent shift in the broadband Internet competitive landscape.

For the third quarter ended Sept. 30, Cox reported revenue of $1.46 billion, in line with the Thomson First Call estimate. Operating income before depreciation and amortization, excluding sales of cable systems, came in at $550.2 million, better than expected.

Also higher than expected was the 169,290 customers for high-speed Internet service that Cox added in the third quarter. Cox had added 112,000 high-speed data customers in the second quarter, and analysts appeared to be expecting in the neighborhood of 145,000 new broadband customers in the quarter.