Mediacom Communications ( MCCC) enjoyed relative investor confidence Monday, while fellow cable operator Cablevision ( CVC) paved the way for the sector's slide. Mediacom, the nation's eighth-largest operator of cable systems, told analysts it has a "clear and direct path" to achieving positive free cash flow from operations in the second half of 2003, encountering little of
the skepticism that Cablevision provoked with similar statements last week. Free cash flow -- or cash flow from operations after capital expenditures and interest expense have been subtracted -- has become the holy grail for cable investors increasingly worried that the billions that operators have spent on plant upgrades and debt service will never achieve the financial payoffs that operators have promised. For the second quarter ended June 30, Mediacom's reported revenue was $230.8 million, up 10.5% from the pro forma figure for the second quarter of 2001. Operating cash flow grew 20% to $95.9 million. Both figures beat company guidance given three months ago. Mediacom reiterated revenue and cash-flow guidance for the full year of 2002. Among the several steps in its journey to free cash flow discussed on a conference call with analysts, Mediacom said it is cutting capital expenditures for 2002 by $20 million to a range of $390 million to $410 million. Capex will drop to $260 million in 2003 and go lower in years beyond that, says Mediacom Chief Financial Officer Mark Stephan.