Mediacom 10-Q 2007 Q3 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

For the quarterly period ended September 30, 2007

Commission File Numbers: 333-57285-01
333-57285

Mediacom LLC
Mediacom Capital Corporation*

(Exact names of Registrants as specified in their charters)

New York	06-1433421
New York	06-1513997
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Numbers)

100 Crystal Run Road
Middletown, New York 10941
(Address of principal executive offices)

(845) 695-2600
(Registrants’ telephone number)

Indicate by check mark whether the Registrants (1) have filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.

o Yesþ No

Note: As a voluntary filer, not subject to the filing requirements, the Registrants have filed all reports under Section 13 or 15(d) of the Exchange Act during the preceding 12 months.

Indicate by check mark whether the Registrants are large accelerated filers, accelerated filers, or non-accelerated filers. See definition of “accelerated filer and large accelerated filers” in Rule 12b-2 of the Exchange Act. (Check one):

o Large accelerated filer o Accelerated filer þ Non-accelerated filer

Indicate by check mark whether the Registrants are a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yesþ No

Indicate the number of shares outstanding of the Registrants’ common stock: Not Applicable

*Mediacom Capital Corporation meets the conditions set forth in General Instruction H (1) (a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format.

MEDIACOM LLC AND SUBSIDIARIES

FORM 10-Q
FOR THE PERIOD ENDED SEPTEMBER 30, 2007

TABLE OF CONTENTS

PART I		Page
Item 1.	Financial Statements
	Consolidated Balance Sheets (unaudited) September 30, 2007 and December 31, 2006		4
	Consolidated Statements of Operations (unaudited) Three and Nine Months Ended September 30, 2007 and 2006		5
	Consolidated Statements of Cash Flows (unaudited) Nine Months Ended September 30, 2007 and 2006		6
	Notes to Consolidated Financial Statements (unaudited)		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		12
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		22
Item 4.	Controls and Procedures		22
PART II
Item 1.	Legal Proceedings		23
Item 1A.	Risk Factors		23
Item 6.	Exhibits		23
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

2

Cautionary Statement Regarding Forward-Looking Statements

You should carefully review the information contained in this Quarterly Report and in other reports or documents that we file from time to time with the Securities and Exchange Commission (the “SEC”).

In this Quarterly Report, we state our beliefs of future events and of our future financial performance. In some cases, you can identify those so-called “forward-looking statements” by words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of those words and other comparable words. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from historical results or those we anticipate. Factors that could cause actual results to differ from those contained in the forward-looking statements include, but are not limited to: existing and future competition in our video, high-speed Internet access and phone businesses; our ability to achieve anticipated customer and revenue growth and to successfully implement our growth strategy, including the introduction of new products and services and acquisitions; increasing programming costs; changes in laws and regulations; our ability to generate sufficient cash flow to meet our debt service obligations and access capital to maintain our financial flexibility; and the other risks and uncertainties discussed in this Quarterly Report and in our Annual Report on Form 10-K for the year ended December 31, 2006 and other reports or documents that we file from time to time with the SEC. Statements included in this Quarterly Report are based upon information known to us as of the date that this Quarterly Report is filed with the SEC, and we assume no obligation to update or alter our forward-looking statements made in this Quarterly Report, whether as a result of new information, future events or otherwise, except as otherwise required by applicable federal securities laws.

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PART I

ITEM 1. FINANCIAL STATEMENTS

MEDIACOM LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(All dollar amounts in thousands)
(Unaudited)

	September 30,			December 31,
	2007			2006
ASSETS
CURRENT ASSETS
Cash	$	6,534		$	11,501
Accounts receivable, net of allowance for doubtful accounts of $848 and $1,235		34,483			32,518
Prepaid expenses and other current assets		10,102			1,523
Total current assets		51,119			45,542
Preferred equity investment in affiliated company		150,000			150,000
Investment in cable television systems:
Property, plant and equipment, net of accumulated depreciation of $978,178 and $909,104		700,518			707,047
Franchise rights		550,763			552,513
Goodwill		16,642			16,800
Subscriber lists, net of accumulated amortization of $137,684 and $138,528		1,038			24
Total investment in cable television systems		1,268,961			1,276,384
Other assets, net of accumulated amortization of $14,597 and $12,933		11,146			14,457
Total assets	$	1,481,226		$	1,486,383
LIABILITIES AND MEMBERS’ DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	173,211		$	156,699
Deferred revenue		22,834			20,863
Current portion of long-term debt		21,507			6,856
Total current liabilities		217,552			184,418
Long-term debt, less current portion		1,505,625			1,541,500
Other non-current liabilities		12,402			11,485
Total liabilities		1,735,579			1,737,403
Commitments and contingencies (Note 9)
MEMBERS’ DEFICIT
Capital contributions		440,521			440,521
Accumulated deficit		(694,874	)		(691,541	)
Total members’ deficit		(254,353	)		(251,020	)
Total liabilities and members’ deficit	$	1,481,226		$	1,486,383

The accompanying notes to the unaudited financial
statements are an integral part of these statements

4

MEDIACOM LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(All amounts in thousands)
(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2007			2006			2007			2006
Revenues	$	144,276		$	134,276		$	421,263		$	393,449
Costs and expenses:
Service costs (exclusive of depreciation and amortization)		62,740			55,999			181,585			164,706
Selling, general and administrative expenses		27,612			26,372			79,034			73,659
Management fee expense		2,461			2,397			7,522			6,978
Depreciation and amortization		28,383			26,490			82,277			77,921
Operating income		23,080			23,018			70,845			70,185
Interest expense, net		(30,212	)		(29,259	)		(89,504	)		(82,477	)
Loss on early extinguishment of debt		—			—			—			(4,624	)
Loss on derivatives, net		(6,053	)		(7,459	)		(4,228	)		(6,498	)
(Loss) gain on sale of cable systems, net		(1,703	)		—			9,078			—
Investment income from affiliate		4,500			4,500			13,500			13,500
Other expense, net		(869	)		(939	)		(3,021	)		(3,193	)
Net loss	$	(11,257	)	$	(10,139	)	$	(3,330	)	$	(13,107	)

The accompanying notes to the unaudited financial
statements are an integral part of these statements

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MEDIACOM LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(All amounts in thousands)
(Unaudited)

	Nine Months Ended
	September 30,
	2007			2006
OPERATING ACTIVITIES:
Net loss	$	(3,330	)	$	(13,107	)
Adjustments to reconcile net loss to net cash flows provided by operating activities:
Depreciation and amortization		82,277			77,921
Loss on derivatives, net		4,228			6,498
Gain on sale of cable systems, net		(9,078	)		—
Loss on early extinguishment of debt		—			2,999
Amortization of deferred financing costs		1,663			1,881
Share-based compensation		337			293
Changes in assets and liabilities, net of effects from acquisitions:
Accounts receivable, net		(1,838	)		(3,245	)
Prepaid expenses and other assets		(9,607	)		784
Accrued liabilities		16,508			15,318
Deferred revenue		1,971			2,237
Other non-current liabilities		(1,232	)		(1,705	)
Net cash flows provided by operating activities		81,899			89,874
INVESTING ACTIVITIES:
Proceeds from sale of cable systems		24,782			—
Acquisition of cable system		(7,274	)		—
Capital expenditures		(83,151	)		(74,707	)
Net cash flows used in investing activities		(65,643	)		(74,707	)
FINANCING ACTIVITIES:
New borrowings		91,034			811,000
Repayment of debt		(112,257	)		(715,189	)
Capital distribution		—			(108,000	)
Other financing activities		—			(23	)
Net cash flows used in financing activities		(21,223	)		(12,212	)
Net (decrease) increase in cash		(4,967	)		2,955
CASH, beginning of period		11,501			6,466
CASH, end of period	$	6,534		$	9,421
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest, net of amounts capitalized	$	112,120		$	90,798

The accompanying notes to the unaudited financial
statements are an integral part of these statements

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1. ORGANIZATION

Mediacom LLC (“Mediacom,” and collectively with its subsidiaries, the “Company,” “we” or “us”), a New York limited liability company wholly-owned by Mediacom Communications Corporation (“MCC”), is involved in the acquisition and operation of cable systems serving smaller cities and towns in the United States.

We have prepared these unaudited consolidated financial statements in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”). In the opinion of management, such statements include all adjustments, consisting of normal recurring accruals and adjustments, necessary for a fair presentation of our consolidated results of operations and financial position for the interim periods presented. The accounting policies followed during such interim periods reported are in conformity with generally accepted accounting principles in the United States of America and are consistent with those applied during annual periods. For a summary of our accounting policies and other information, refer to our Annual Report on Form 10-K for the year ended December 31, 2006. The results of operations for the interim periods are not necessarily indicative of the results that might be expected for future interim periods or for the full year ending December 31, 2007.

We rely on our parent, MCC, for various services such as corporate and administrative support. Our financial position, results of operations and cash flows could differ from those that would have resulted had we operated autonomously or as an entity independent of MCC.

Mediacom Capital Corporation (“Mediacom Capital”), a New York corporation wholly-owned by us, co-issued, jointly and severally with us, public debt securities. Mediacom Capital has no operations, revenues or cash flows, and has no assets, liabilities or stockholders’ equity on its consolidated balance sheets other than a one-hundred dollar receivable from an affiliate and the same dollar amount of common stock. Therefore, separate financial statements have not been presented for this entity.

Reclassifications

Certain reclassifications have been made to the prior year amounts to conform to the current year’s presentation.

2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157,“Fair Value Measurements”(“SFAS No. 157”). SFAS No. 157 establishes a single authoritative definition of fair value, sets out a framework for measuring fair value, and expands on required disclosures about fair value measurement. SFAS No. 157 will be effective as of January 1, 2008 and will be applied prospectively. We have not completed our evaluation of SFAS No. 157 to determine the impact that adoption will have on our consolidated financial condition or results of operations.

In February 2007, the FASB issued SFAS No. 159,“The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115”(“SFAS No. 159”). SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. This Statement is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. We do not expect that this Statement will have a material impact on our consolidated financial condition or results of operations.

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3. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following (dollars in thousands):

	September 30,			December 31,
	2007			2006
Cable systems, equipment and subscriber devices	$	1,605,473		$	1,547,147
Vehicles		34,218			30,492
Furniture, fixtures and office equipment		21,257			20,632
Buildings and leasehold improvements		16,260			16,177
Land and land improvements		1,488			1,703
		1,678,696			1,616,151
Accumulated depreciation		(978,178	)		(909,104	)
Property, plant and equipment, net	$	700,518		$	707,047

4. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following (dollars in thousands):

	September 30,		December 31,
	2007		2006
Accrued programming costs	$	27,038	$	20,463
Accounts payable		24,047		15,000
Accrued interest		13,101		33,273
Accrued taxes and fees		13,079		13,298
Accrued payroll and benefits		11,500		10,302
Accrued property, plant and equipment		10,484		8,764
Accrued service costs		9,816		8,978
Accrued telecommunications costs		9,597		7,148
Subscriber advance payments		6,543		5,768
Intercompany accounts payable and other accrued expenses		48,006		33,705
	$	173,211	$	156,699

5. DEBT

Debt consisted of the following (dollars in thousands):

	September 30,		December 31,
	2007		2006
Bank credit facilities	$	902,125	$	923,000
77/8% senior notes due 2011		125,000		125,000
91/2% senior notes due 2013		500,000		500,000
Capital lease obligations		7		356
		1,527,132		1,548,356
Less: Current portion		21,507		6,856
Total long-term debt	$	1,505,625	$	1,541,500

8

Bank Credit Facilities

The average interest rates on outstanding debt under our bank credit facilities as of September 30, 2007 and December 31, 2006, were 6.9% and 7.1% respectively, before giving effect to the interest rate exchange agreements discussed below. As of September 30, 2007, we had unused credit commitments of approximately $325.0 million under our bank credit facilities, all of which could be borrowed and used for general corporate purposes based on the terms and conditions of our debt arrangements. We were in compliance with all covenants of our debt arrangements as of September 30, 2007.

As of September 30, 2007, approximately $18.0 million of letters of credit were issued to various parties as collateral for our performance relating primarily to insurance and franchise requirements.

Interest Rate Exchange Agreements

We use interest rate exchange agreements in order to fix the interest rate on our floating rate debt. As of September 30, 2007, we had interest rate exchange agreements with various banks pursuant to which the interest rate on $400.0 million was fixed at a weighted average rate of approximately 5.0%. These agreements have been accounted for on a mark-to-market basis. Our interest rate exchange agreements are scheduled to expire in the amounts of $300.0 million and $100.0 million during the years ended December 31, 2009 and 2010, respectively. As of and for the three months ended September 30, 2007 and 2006, based on the mark-to-market valuation, we recorded on our consolidated balance sheet a net accumulated liability for derivatives of $3.8 million and a net accumulated investment in derivatives of $1.0 million, respectively, which are components of accounts payable and other non-current liabilities and prepaid and other non-current assets, and we recorded in our consolidated statements of operations a loss on derivatives, net of $6.1 million and $7.5 million, respectively. For the nine months ended September 30, 2007 and 2006, we recorded in our consolidated financial statements of operations a loss on derivatives, net of $4.2 million and $6.5 million, respectively.

6. MEMBERS’ DEFICIT

Share-based Compensation

Effective January 1, 2006, MCC adopted SFAS No. 123(R), “Share-Based Payment,” requiring the cost of all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values at the grant date, or the date of later modification, over the requisite service period.

9

Total share-based compensation expense was as follows (dollars in thousands):

	Three Months Ended			Three Months Ended
	September 30,			September 30,
	2007			2006
Share-based compensation expense by type of award:
Employee stock options	$	(6	)(1)	$	24
Employee stock purchase plan		15			26
Restricted stock units		92			53
Total share-based compensation expense	$	101		$	103

⁽¹⁾ Includes forfeiture adjustments

	Nine Months Ended		Nine Months Ended
	September 30,		September 30,
	2007		2006
Share-based compensation expense by type of award:
Employee stock options	$	39	$	94
Employee stock purchase plan		42		51
Restricted stock units		255		148
Total share-based compensation expense	$	336	$	293

Employee Stock Purchase Plan

We maintain an employee stock purchase plan (“ESPP”). Under the ESPP, all employees are allowed to participate in the purchase of MCC’s Class A common stock at 85% of the lower of the fair market value on the first or last day of each six month offering period. Shares purchased by employees amounted to approximately 16,000 and 17,000 for the three months ended September 30, 2007 and 2006, respectively. Shares purchased by employees amounted to approximately 31,000 and 37,000 for the nine months ended September 30, 2007 and 2006, respectively. The net proceeds to us were less than $0.1 million for the three months ended September 30, 2007 and 2006, respectively. The net proceeds to us were approximately $0.1 million for the three and nine months ended September 30, 2007 and 2006, respectively.

7. INVESTMENT IN AFFILIATED COMPANY

We have a $150.0 million preferred equity investment in Mediacom Broadband LLC, a wholly owned subsidiary of MCC. The preferred equity investment has a 12% annual cash dividend, payable quarterly in cash. During each of the three and nine months ended September 30, 2007 and 2006, we received in aggregate $4.5 million and $13.5 million, respectively, in cash dividends on the preferred equity.

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8. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

We are named as a defendant in a putative class action, captionedGary Ogg and Janice Ogg v. Mediacom, LLC, pending in the Circuit Court of Clay County, Missouri, by which the plaintiffs are seeking class-wide damages for alleged trespasses on land owned by private parties. The lawsuit was originally filed on April 24, 2001. Pursuant to various agreements with the relevant state, county or other local authorities and with utility companies, we placed interconnect fiber optic cable within state and county highway rights-of-way and on utility poles in areas of Missouri not presently encompassed by a cable franchise. The lawsuit alleges that we were required but failed to obtain permission from the landowners to place the cable. A summary judgment ruling in favor of us was overturned by the Missouri Court of Appeals. The lawsuit has not made a claim for specified damages. An order declaring that this action is appropriate for class relief was entered on April 14, 2006. Our petition for an interlocutory appeal or in the alternative a writ of mandamus was denied by order of the Supreme Court of Missouri, dated October 31, 2006. We intend to vigorously defend against any claims made by the plaintiffs, including at trial, and on appeal, if necessary. We have tendered the lawsuit to our insurance carrier for defense and indemnification. The carrier has agreed to defend us under a reservation of rights, and a declaratory judgment action is pending regarding the carrier’s defense and coverage responsibilities. We are unable to reasonably evaluate the likelihood of an unfavorable outcome or quantify the possible damages, if any, associated with these matters, or judge whether or not those damages would be material to our consolidated financial position, results of operations, cash flows or business.

We, our subsidiaries, MCC and other affiliated companies are also involved in various legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on our consolidated financial position, results of operations, cash flows or business.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our unaudited consolidated financial statements as of, and for the three and nine months ended, September 30, 2007 and 2006, and with our annual report on Form 10-K for the year ended December 31, 2006.

Overview

We are a wholly-owned subsidiary of Mediacom Communications Corporation (“MCC”). Through our interactive broadband network, we provide our customers with a wide array of broadband products and services, including video services, such as video-on-demand (“VOD”), high-definition television (“HDTV”) and digital video recorders (“DVRs”), high-speed data access (“HSD”) and phone service. We offer triple-play bundles of video, HSD and phone to approximately 79% of our estimated homes passed. Bundled products and services offer our customers a single provider contact for ordering, provisioning, billing and customer care.

As of September 30, 2007, our cable systems passed an estimated 1.36 million homes and served 608,000 basic video subscribers in 22 states. We provide digital video service to 232,000 customers, representing a penetration of 38.2% of our basic subscribers, and provide HSD to 287,000 customers, representing a penetration of 21.1% of our estimated homes passed. We introduced phone service across several of our markets during the second quarter of 2005, and provided service to about 68,000 customers as of September 30, 2007, representing a penetration of 6.3% of our 1.1 million estimated marketable phone homes.

We evaluate our growth, in part, by measuring the number of revenue generating units (“RGUs”) we serve, which represent the total of basic subscribers and digital, data and phone customers. As of September 30, 2007, we served 1.20 million RGUs, as compared to 1.12 million RGUs on September 30, 2006.

We have faced increasing levels of competition for our video programming services over the past few years, mostly from DBS providers. DirecTV and Echostar now have essentially ubiquitous coverage in our markets with local television broadcast signals. Their ability to deliver these signals has been the primary cause of our loss of basic subscribers in recent years.

Retransmission Consent

Prior to February 2007, cable systems serving our subscribers carried the broadcast signals of 21 local broadcast stations owned or programmed by Sinclair Broadcast Group, Inc. (“Sinclair”) under a month-to-month retransmission arrangement terminable at the end of any month on 45-days notice. Ten of these stations are affiliates of one of the “big-4” networks (ABC, CBS, FOX and NBC) that we deliver to approximately half of our total subscribers. The other stations are affiliates of the recently launched CW or MyNetwork broadcast networks or are unaffiliated with a national broadcast network.

On September 28, 2006, Sinclair exercised its right to deliver notice to us to terminate retransmission of all of its stations effective December 1, 2006, but subsequently agreed to extend our right to carriage of its signals until January 5, 2007. We and Sinclair were unable to reach agreement, and on January 5, 2007, Sinclair directed us to discontinue carriage of its stations. On February 2, 2007, we and Sinclair reached a multi-year agreement and Sinclair stations were immediately restored on the affected cable systems. As a result of the retransmission consent dispute, both prior to and during the loss of carriage of the Sinclair stations, we experienced higher levels of basic subscriber losses in the fourth quarter of 2006 and the first quarter of 2007.

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Adjusted OIBDA

We define Adjusted OIBDA as operating income before depreciation and amortization and non-cash, share-based compensation charges. Adjusted OIBDA is one of the primary measures used by management to evaluate our performance and to forecast future results but is not a financial measure calculated in accordance with generally accepted accounting principles (GAAP) in the United States. We believe Adjusted OIBDA is useful for investors because it enables them to assess our performance in a manner similar to the methods used by management, and provides a measure that can be used to analyze, value and compare the companies in the cable television industry, which may have different depreciation and amortization policies, as well as different non-cash, share-based compensation programs. A limitation of Adjusted OIBDA, however, is that it excludes depreciation and amortization, which represents the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our business. Management utilizes a separate process to budget, measure and evaluate capital expenditures. In addition, Adjusted OIBDA has the limitation of not reflecting the effect of our non-cash, share-based compensation charges.

Adjusted OIBDA should not be regarded as an alternative to either operating income or net income (loss) as an indicator of operating performance nor should it be considered in isolation or as a substitute for financial measures prepared in accordance with GAAP. We believe that operating income is the most directly comparable GAAP financial measure to Adjusted OIBDA.

Actual Results of Operations

Three Months Ended September 30, 2007 compared to Three Months Ended September 30, 2006

The following tables set forth our unaudited consolidated statements of operations for the three months ended September 30, 2007 and 2006 (dollars in thousands and percentage changes that are not meaningful are marked NM):

	Three Months Ended
	September 30,
	2007			2006			$ Change			% Change
Revenues	$	144,276		$	134,276		$	10,000			7.4	%
Costs and expenses:
Service costs (exclusive of depreciation and amortization)		62,740			55,999			6,741			12.0	%
Selling, general and administrative expenses		27,612			26,372			1,240			4.7	%
Management fee expense		2,461			2,397			64			2.7	%
Depreciation and amortization		28,383			26,490			1,893			7.1	%
Operating income		23,080			23,018			62			0.3	%
Interest expense, net		(30,212	)		(29,259	)		(953	)		3.3	%
Loss on derivatives, net		(6,053	)		(7,459	)		1,406			(18.8	%)
Loss on sale of cable systems		(1,703	)		—			(1,703	)	NM
Investment income from affiliate		4,500			4,500			—			0.0	%
Other expense, net		(869	)		(939	)		70			(7.5	%)
Net loss	$	(11,257	)	$	(10,139	)	$	(1,118	)		11.0	%
		��
Adjusted OIBDA	$	51,564		$	49,611		$	1,953			3.9	%

13

The following represents a reconciliation of Adjusted OIBDA to operating income, which is the most directly comparable GAAP measure (dollars in thousands and percentage changes that are not meaningful are marked NM):

	Three Months Ended
	September 30,
	2007			2006			$ Change			% Change
Adjusted OIBDA	$	51,564		$	49,611		$	1,953			3.9	%
Non-cash, share-based compensation		(101	)		(103	)		2			(1.9	%)
Depreciation and amortization		(28,383	)		(26,490	)		(1,893	)		7.1	%
Operating income	$	23,080		$	23,018		$	62			0.3	%

Revenues

The following tables set forth our unaudited revenue, subscriber and average monthly revenue statistics for the three months ended September 30, 2007 and 2006 (dollars in thousands, except per subscriber and customer data and percentage changes that are not meaningful are marked NM):

	Three Months Ended
	September 30,
	2007		2006		$ Change		% Change
Video	$	101,288	$	100,014	$	1,274		1.3	%
Data		31,988		27,272		4,716		17.3	%
Phone		5,755		2,107		3,648		173.1	%
Advertising		5,245		4,883		362		7.4	%
	$	144,276	$	134,276	$	10,000		7.4	%

	September 30,				Increase/
	2007		2006		(Decrease)			% Change
Basic subscribers		608,000		636,000		(28,000	)		(4.4	%)
Digital customers		232,000		217,000		15,000			6.9	%
Data customers		287,000		243,000		44,000			18.1	%
Phone customers		68,000		23,000		45,000			195.7	%
RGUs(1)		1,195,000		1,119,000		76,000			6.8	%
Average total monthly revenue per basic subscriber(2)	$	78.58	$	69.94	$	8.64			12.4	%
Average total monthly revenue per RGU(3)	$	40.50	$	40.31	$	0.19			0.5	%

(1)	Represents the total of basic subscribers and digital, data, and phone customers at the end of each period.
(2)	Represents revenues for the quarter divided by the average number of basic subscribers for such period.
(3)	Represents revenues for the quarter divided by the average number of RGUs for such period.

Revenues

Video revenues represent monthly subscription fees charged to customers for our core cable television products and services (including basic, expanded basic and digital cable programming services, wire maintenance, equipment rental and services to commercial establishments), pay-per-view charges, installation, reconnection, and late payment fees, and other ancillary revenues. Data revenues primarily represent monthly fees charged to customers, including commercial establishments, for our data products and services and equipment rental fees. Franchise fees charged to customers for payment to local franchising authorities are included in their corresponding revenue category. Phone revenues represent monthly fees charged to customers. Advertising revenues represent the sale of advertising time on various channels.

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Revenues rose 7.4%, largely attributable to growth in our data and phone customers. Average total monthly revenue per basic subscriber grew 12.4%. RGUs grew 6.8% and average total monthly revenue per RGU grew 0.5%.

Video revenues grew 1.3% due to higher service fees from our advanced video products and services, such as DVRs and HDTV, and basic video rate increases, offset in part by a lower number of basic subscribers. Since June 30, 2007, we lost 8,000 basic subscribers, which was unchanged from the loss for the same period last year. Since September 30, 2006, we lost 28,000 subscribers, including a significant amount of basic subscribers lost in connection with the retransmission consent dispute with Sinclair and the sale during the period of cable systems serving on a net basis 4,100 basic subscribers.

Data revenues rose 17.3%, primarily due to a 18.1% increase in data customers.

Phone revenues grew 173.1%, largely due to a 195.7% increase in phone customers.

Advertising revenues increased 7.4%, largely as a result of a 14-week broadcast sales period this quarter, as compared to a 13-week period in the three months ended September 30, 2006.

Costs and Expenses

Significant service costs and expenses are for: video programming; wages and salaries of technical personnel who maintain our cable network, perform customer installation activities, and provide customer support; our data and phone services, including payments to third-party providers and costs associated with bandwidth connectivity and customer provisioning; and field operating costs, including outside contractors, vehicle, utilities and pole rental expenses. Video programming costs, which are generally paid on a per subscriber basis, represent our largest single expense category and have historically increased due to both increases in the rates charged for existing programming services and the introduction of new programming services to our customers. Video programming costs are expected to continue to grow principally because of contractual unit rate increases and the increasing demands of television broadcast station owners for retransmission consent fees. As a consequence, it is expected that our video gross margins will decline as increases in programming costs outpace growth in video revenues.

Service costs rose 12.0%, primarily due to customer growth in our phone and HSD services and increases in programming expenses. Recurring expenses related to our phone and HSD services grew 226.7% commensurate with the significant increase of our phone and data customers. Programming expense rose 4.4%, principally as a result of higher unit costs charged by our programming vendors, offset in part by a lower number of basic subscribers. Service costs as a percentage of revenues were 43.5% and 41.7% for the three months ended September 30, 2007 and 2006, respectively.

Significant selling, general and administrative expenses include: wages and salaries for our call centers, customer service and support and administrative personnel; franchise fees and taxes; marketing; bad debt; billing; advertising; and costs related to telecommunications for our call centers and office administration.

Selling, general and administrative expenses rose 4.7%, principally due to higher marketing, office and bad debt expenses, offset in part by a reduction in taxes and fees. Marketing costs rose 11.3%, largely due to increases in product and service advertising and personnel costs, and a decrease in promotional support. Office costs increased by 13.8%, primarily due to higher call center telecommunications charges. Bad debt expenses were higher by 14.2%, primarily due to higher average write-offs per delinquent account and increased collections expenses. Taxes and fees decreased 5.2%, primarily due to a reduction in state property taxes. Selling, general and administrative expenses as a percentage of revenues were 19.1% and 19.6% for the three months ended September 30, 2007 and 2006, respectively.

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We expect continued revenue growth in our advanced products and services. As a result, we expect our service costs and selling, general and administrative expenses to increase.

Management fee expense reflects charges incurred under management arrangements with our parent, MCC. Management fee expense increased 2.7%, reflecting higher overhead charges by MCC. Management fee expenses as a percentage of revenues were 1.7% and 1.8% for the three months ended September 30, 2007 and 2006, respectively.

Depreciation and amortization rose 7.1%, primarily due to increased deployment of shorter-lived customer premise equipment, partly offset by lower spending on plant upgrade and rebuild.

Adjusted OIBDA

Adjusted OIBDA increased by 3.9%, due to revenue growth, especially in data and phone, offset in part by increases in service costs, and selling, general and administrative expenses.

Operating Income

Operating income was essentially flat compared to the prior year period, due to growth in Adjusted OIBDA, offset by higher depreciation and amortization expense.

Interest Expense, Net

Interest expense, net, increased by 3.3%, primarily due to the expiration of certain interest rate hedging agreements with favorable rates, and to a lesser extent, higher average indebtedness.

Loss on Derivatives, Net

We enter into interest rate exchange agreements, or “interest rate swaps,” with counterparties to fix the interest rate on a portion of our variable rate debt to reduce the potential volatility in our interest expense that would otherwise result from changes in variable market interest rates. As of September 30, 2007 we had interest rate swaps with an aggregate principal amount of $400.0 million. The changes in their mark-to-market values are derived from changes in market interest rates, the decrease in their time to maturity and the creditworthiness of the counterparties. As a result of the quarterly mark-to-market valuation of these interest rate swaps, we recorded a loss on derivatives, net amounting to $6.1 million and $7.5 million for the three months ended September 30, 2007 and 2006, respectively.

Loss on Sale of Cable Systems

During the three months ended September 30, 2007, we sold cable systems for $1.8 million and recorded a loss on sale of $1.7 million.

Investment Income from Affiliate

Investment income from affiliate was $4.5 million for the three months ended September 30, 2007. This amount represents the investment income on our $150.0 million preferred equity investment in Mediacom Broadband LLC, a wholly owned subsidiary of MCC.

Net Loss

As a result of the factors described above, we recognized a net loss for the three months ended September 30, 2007 of $11.3 million, compared to a net loss of $10.1 million for the three months ended September 30, 2006.

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Nine Months Ended September 30, 2007 compared to Nine Months Ended September 30, 2006

The following tables set forth our unaudited consolidated statements of operations for the nine months ended September 30, 2007 and 2006 (dollars in thousands and percentage changes that are not meaningful are marked NM):

	Nine Months Ended
	September 30,
	2007			2006			$ Change			% Change
Revenues	$	421,263		$	393,449		$	27,814			7.1	%
Costs and expenses:
Service costs (exclusive of depreciation and amortization)		181,585			164,706			16,879			10.2	%
Selling, general and administrative expenses		79,034			73,659			5,375			7.3	%
Management fee expense		7,522			6,978			544			7.8	%
Depreciation and amortization		82,277			77,921			4,356			5.6	%
Operating income		70,845			70,185			660			0.9	%
Interest expense, net		(89,504	)		(82,477	)		(7,027	)		8.5	%
Loss on early extinguishment of debt		—			(4,624	)		4,624		NM
Loss on derivatives, net		(4,228	)		(6,498	)		2,270			(34.9	%)
Gain on sale of cable systems, net		9,078			—			9,078		NM
Investment income from affiliate		13,500			13,500			—		NM
Other expense, net		(3,021	)		(3,193	)		172			(5.4	%)
Net loss	$	(3,330	)	$	(13,107	)	$	9,777			(74.6	%)
Adjusted OIBDA	$	153,458		$	148,399		$	5,059			3.4	%

The following represents a reconciliation of Adjusted OIBDA to operating income, which is the most directly comparable GAAP measure (dollars in thousands and percentage changes that are not meaningful are marked NM):

	Nine Months Ended
	September 30,
	2007			2006			$ Change			% Change
Adjusted OIBDA	$	153,458		$	148,399		$	5,059			3.4	%
Non-cash, share-based compensation		(336	)		(293	)		(43	)		14.7	%
Depreciation and amortization		(82,277	)		(77,921	)		(4,356	)		5.6	%
Operating income	$	70,845		$	70,185		$	660			0.9	%

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Revenues

The following tables set forth our unaudited revenue, subscriber and average monthly revenue statistics for the nine months ended September 30, 2007 and 2006 (dollars in thousands, except per subscriber and customer data and percentage changes that are not meaningful are marked NM):

	Nine Months Ended
	September 30,
	2007		2006		$ Change		% Change
Video	$	298,997	$	297,195	$	1,802		0.6	%
Data		92,791		77,866		14,925		19.2	%
Phone		14,752		4,232		10,520		248.6	%
Advertising		14,723		14,156		567		4.0	%
	$	421,263	$	393,449	$	27,814		7.1	%

	September 30,				Increase/
	2007		2006		(Decrease)			% Change
Basic subscribers		608,000		636,000		(28,000	)		(4.4	%)
Digital customers		232,000		217,000		15,000			6.9	%
Data customers		287,000		243,000		44,000			18.1	%
Phone customers		68,000		23,000		45,000			195.7	%
RGUs(1)		1,195,000		1,119,000		76,000			6.8	%
Average total monthly revenue per basic subscriber(2)	$	75.68	$	67.99	$	7.69			11.3	%
Average total monthly revenue per RGU(3)	$	40.01	$	39.91	$	0.10			0.3	%

(1)	Represents the total of basic subscribers and digital, data, and phone customers at the end of each period.
(2)	Represents revenues for the period divided by the average number of basic subscribers for such period.
(3)	Represents revenues for the period divided by the average number of RGUs for such period.

Revenues rose 7.1%, largely attributable to growth in our data and phone customers. Average total monthly revenue per basic subscriber grew 11.3%. RGUs grew 6.8% year-over-year and average total monthly revenue per RGU was essentially flat compared with the prior year period.

Video revenues grew 0.6% for the nine month period, with higher service fees from our advanced video products and services, such as DVRs and HDTV, offset by a lower number of basic subscribers. Since December 31, 2006, we lost 21,000 basic subscribers, including a significant number of basic subscribers lost in connection with the retransmission consent dispute with Sinclair, and the sale during the period of cable systems serving on a net basis 4,100 basic subscribers, compared to a loss of 14,000 basic subscribers for the same period last year.

Data revenues rose 19.2%, primarily due to a 18.1% increase in data customers.

Phone revenues grew 248.6% largely due to a 195.7% increase in phone customers.

Advertising revenues increased 4.0%, largely as a result of stronger local advertising sales.

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Costs and Expenses

Service costs rose 10.2%, primarily due to customer growth in our phone and HSD services and increases in programming expenses. Recurring expenses related to our phone and HSD services grew 54.6%, commensurate with the significant increase of our phone and data customers. Programming expense rose 5.4%, principally as a result of higher unit costs charged by our programming vendors, offset in part by a lower number of basic subscribers. Service costs as a percentage of revenues were 43.1% and 41.86% for the nine months ended September 30, 2007 and 2006, respectively.

Selling, general and administrative expenses rose 7.3%, principally due to higher marketing, bad debt and office expenses. Marketing costs rose by 16.1%, largely due to increases in product and service advertising, direct mailing campaigns and personnel costs, and a decrease in promotional support. Bad debt expenses were higher by 27.0%, primarily due to higher average write-offs per delinquent account, unusually low write-offs of uncollectible accounts in the prior year period and increased collection expense. Office costs increased by 16.9%, primarily due to higher call center telecommunications charges. Selling, general and administrative expenses as a percentage of revenues were 18.8% and 18.7% for the nine months ended September 30, 2007 and 2006, respectively.

We expect continued revenue growth in our advanced products and services. As a result, we expect our service costs and selling, general and administrative expenses to increase.

Management fee expense reflects charges incurred under management arrangements with our parent, MCC. Management fee expense increased 7.8%, reflecting higher overhead charges by MCC. Management fee expenses as a percentage of revenues were 1.7% for each of the nine month periods ended September 30, 2007 and 2006.

Depreciation and amortization rose 5.6%, due primarily to increased deployment of customer premise equipment, offset by lower spending on plant upgrade and rebuild.

Adjusted OIBDA

Adjusted OIBDA rose 3.4%, due to revenue growth, especially in data and phone, offset in part by increases in service costs and selling, general and administrative expenses.

Operating Income

Operating income grew 0.9%, due to growth in Adjusted OIBDA, largely offset by higher depreciation and amortization expense.

Interest Expense, Net

Interest expense, net, increased by 8.5%, primarily due to the expiration of certain interest rate hedging agreements with favorable rates and, to a lesser extent, higher average indebtedness.

Loss on Derivatives, Net

We enter into interest rate exchange agreements, or “interest rate swaps,” with counterparties to fix the interest rate on a portion of our variable rate debt to reduce the potential volatility in our interest expense that would otherwise result from changes in variable market interest rates. As of September 30, 2007 we had interest rate swaps with an aggregate principal amount of $400.0 million. The changes in their mark-to-market values are derived from changes in market interest rates, the decrease in their time to maturity and the creditworthiness of the counterparties. As a result of the quarterly mark-to-market valuation of these interest rate swaps, we recorded a loss on derivatives, net amounting to $4.2 million and $6.5 million for the nine months ended September 30, 2007 and 2006, respectively.

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Gain on Sale of Cable Systems, net

During the nine months ended September 30, 2007, we sold cable systems for $24.8 million and recorded a gain on sale of $9.1 million.

Investment Income from Affiliate

Investment income from affiliate was $13.5 million for the nine months ended September 30, 2007 and 2006, respectively. This amount represents the investment income on our $150.0 million preferred equity investment in Mediacom Broadband LLC, a wholly owned subsidiary of MCC.

Net Loss

As a result of the factors described above, we recognized a net loss for the nine months ended September 30, 2007 of $3.3 million, compared to a net loss of $13.1 million for the nine months ended September 30, 2006.

Liquidity and Capital Resources

Overview

We have invested, and will continue to invest, in our network to enhance its reliability and capacity, and in the further deployment of advanced broadband services. Our capital spending has recently shifted from network upgrade investments to the deployment of advanced services. We also may continue to make strategic acquisitions of cable systems. We have a high level of indebtedness and incur significant amounts of interest expense each year. We believe that we will meet our debt service, capital spending and other requirements through a combination of our net cash flows from operating activities, borrowing availability under our bank credit facilities, and our ability to secure future external financing.

As of September 30, 2007, our total debt was $1,527.1 million, of which $21.5 million matures within the twelve months ending September 30, 2008. During the nine months ended September 30, 2007, we paid cash interest of approximately $112.1 million, net of capitalized interest. As of September 30, 2007, we had unused revolving credit commitments of approximately $324.9 million, all of which could be borrowed and used for general corporate purposes based on the terms and conditions of our debt arrangements.

For all periods through September 30, 2007, we were in compliance with all of the covenants under our debt arrangements. Continued access to our credit facilities is subject to our remaining in compliance with the covenants of these credit facilities, including covenants tied to our operating performance. There are no covenants, events of default, borrowing conditions or other terms in our credit facilities or our other debt arrangements that are based on changes in our credit ratings assigned by any rating agency. We believe that we will not have any difficulty in the foreseeable future complying with these covenants and that we will meet our current and long-term debt service, capital spending, and other cash requirements through a combination of our net cash flows from operating activities, borrowing availability under our bank credit facilities, and our ability to secure future external financing. However, there is no assurance that we will be able to obtain sufficient future financing, or, if we were able to do so, that the terms would be favorable to us. Our future access to debt financings and the cost of such financings are affected by our credit ratings. Any future downgrade to our credit ratings could increase the cost of debt and adversely impact our ability to raise additional funds.

Operating Activities

Net cash flows provided by operating activities were $81.9 million for the nine months ended September 30, 2007, as compared to $89.9 million for the comparable period last year. The change of $8.0 million is primarily due to the loss on early extinguishment of debt in the nine months ended September 30, 2006, and to a lesser extent, the net change in operating assets and liabilities.

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During the nine months ended September 30, 2007, the net change in our operating assets and liabilities was $5.8 million, primarily due to an increase in our accrued liabilities of $16.5 million and an increase in deferred revenue of $2.0 million, offset by an increase in our prepaid expenses and other assets of $9.6 million, an increase in accounts receivable net of $1.8 million and a decrease in our other non-current liabilities of $1.2 million.

Investing Activities

Net cash flows used in investing activities were $65.6 million for the nine months ended September 30, 2007, as compared to $74.7 million for the prior year period. Capital expenditures increased $8.4 million to $83.2 million primarily due to higher spending on customer premise equipment and installation activities. In addition, we received proceeds of $24.8 million from the sale of cable systems and spent $7.3 million to purchase a cable system.

Financing Activities

Net cash flows used in financing activities were $21.2 million for the nine months ended September 30, 2007, largely due to a net reduction of debt. Net cash flows used in financing activities were $12.2 million for the comparable period in 2006, largely due to net bank borrowings, offset by a distribution to our parent.

Other

We have entered into interest rate exchange agreements with counterparties, which expire from 2009 through 2010, to hedge $400.0 million of floating rate debt. These agreements have been accounted for on a mark-to-market basis as of, and for the three months ended September 30, 2007. Our interest rate exchange agreements are scheduled to expire in the amounts of $300.0 million and $100.0 million during the years ended December 31, 2009 and 2010, respectively.

As of September 30, 2007, approximately $18.0 million of letters of credit were issued to various parties as collateral for our performance relating to insurance and franchise requirements.

Contractual Obligations and Commercial Commitments

There have been no material changes to our contractual obligations and commercial commitments as previously disclosed in our annual report on Form 10-K for the year ended December 31, 2006.

Critical Accounting Judgments and Estimates

Use of Estimates

The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Periodically, we evaluate our estimates, including those related to doubtful accounts, long-lived assets, capitalized costs and accruals. We base our estimates on historical experience and on various other assumptions that we believe are reasonable. Actual results may differ from these estimates under different assumptions or conditions. For a discussion of our critical accounting judgments and estimates that we believe require significant judgment in the preparation of our consolidated financial statements, please refer to our annual report on Form 10-K for the year ended December 31, 2006.

Inflation and Changing Prices

Our systems’ costs and expenses are subject to inflation and price fluctuations. Such changes in costs and expenses can generally be passed through to subscribers. Programming costs have historically increased at rates in excess of inflation and are expected to continue to do so. We believe that under the Federal Communications Commission’s existing cable rate regulations, we may increase rates for cable television services to more than cover any increases in programming. However, competitive conditions and other factors in the marketplace may limit our ability to increase our rates.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no significant changes to the information required under this Item from what was disclosed in Item 7A of our annual report on Form 10-K for the year ended December 31, 2006.

ITEM 4. CONTROLS AND PROCEDURES

Mediacom LLC

Under the supervision and with the participation of the management of Mediacom LLC (“Mediacom”), including Mediacom’s Chief Executive Officer and Chief Financial Officer, Mediacom evaluated the effectiveness of Mediacom’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation, Mediacom’s Chief Executive Officer and Chief Financial Officer concluded that Mediacom’s disclosure controls and procedures were effective as of September 30, 2007.

There has not been any change in Mediacom’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2007 that has materially affected, or is reasonably likely to materially affect, Mediacom’s internal control over financial reporting.

Mediacom Capital Corporation

Under the supervision and with the participation of the management of Mediacom Capital Corporation (“Mediacom Capital”), including Mediacom Capital’s Chief Executive Officer and Chief Financial Officer, Mediacom Capital evaluated the effectiveness of Mediacom Capital’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation, Mediacom Capital’s Chief Executive Officer and Chief Financial Officer concluded that Mediacom Capital’s disclosure controls and procedures were effective as of September 30, 2007.

There has not been any change in Mediacom Capital’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2007 that has materially affected, or is reasonably likely to materially affect, Mediacom Capital’s internal control over financial reporting.

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PART II

ITEM 1. LEGAL PROCEEDINGS

See Note 8 to our consolidated financial statements.

ITEM 1A. RISK FACTORS

There have been no material changes in our risk factors from those disclosed in the risk factors section in Item 1A of our2006 Form 10-K.

ITEM 6. EXHIBITS

Exhibit
Number		Exhibit Description
	31.1	Rule 15d-14(a) Certifications of Mediacom LLC
	31.2	Rule 15d-14(a) Certifications of Mediacom Capital Corporation
	32.1	Section 1350 Certifications of Mediacom LLC
	32.2	Section 1350 Certifications of Mediacom Capital Corporation

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	MEDIACOM LLC
November 14, 2007	By:	/s/ Mark E. Stephan
		Mark E. Stephan
		Executive Vice President and Chief Financial Officer

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	MEDIACOM CAPITAL CORPORATION
November 14, 2007	By:	/s/ Mark E. Stephan
		Mark E. Stephan
		Executive Vice President and Chief Financial Officer

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EXHIBIT INDEX

Exhibit
Number		Exhibit Description
	31.1	Rule 15d-14(a) Certifications of Mediacom LLC
	31.2	Rule 15d-14(a) Certifications of Mediacom Capital Corporation
	32.1	Section 1350 Certifications of Mediacom LLC
	32.2	Section 1350 Certifications of Mediacom Capital Corporation

26