U S WEST MEDIA GROUP
7800 East Orchard Road
Englewood, Colorado 80111
[U S WEST Media Group logo and registered mark]
News Release
Release Date: October 25, 1996
Contact: Blair Johnson Cathy Fowler
(303) 793-6296 (303) 793-6509
MEDIA GROUP REPORTS THIRD-QUARTER
OPERATING CASH FLOW INCREASE OF 22 PERCENT
ENGLEWOOD, Colo. - U S WEST Media Group (NYSE: UMG) today reported record
third-quarter results, driven by robust growth in its cable, wireless and
directory operations.
For the quarter ending September 30, Media Group reported -- on a
proportionate basis:
- A 22-percent increase in operating cash flow compared with the third
quarter last year -- excluding the effects of a one-time charge of $35 million
to streamline operations at U S WEST Direct and U S WEST International. For
the quarter, operating cash flow was $410 million excluding the charge.
Operating cash flow, which represents earnings before interest, taxes,
depreciation and amortization (EBITDA), is an important measure of operating
performance.
- A 20-percent increase in revenue. During the quarter, Media Group
generated $1.5 billion in revenue.
- A 17-percent increase in customers worldwide. Media Group now serves
6.5 million customers.
Because Media Group participates in numerous joint ventures, the company uses
proportionate accounting to reflect its relative share of operating revenues
and expenses associated with these operations.
"This has been an excellent quarter for Media Group," said Richard McCormick,
U S WEST chairman and chief executive officer. "These results demonstrate our
success in delivering more services to more customers in more markets. And
we'll take another big step next month when Media Group closes its merger with
Continental Cablevision."
Chuck Lillis, U S WEST Media Group president and chief executive officer, said
Media Group's third-quarter performance reflects its commitment to delivering
superior operating results.
"All three of our businesses reported record-level results," Lillis said.
"Our cable subscriber growth in Atlanta is twice the industry average.
Domestic cellular cash flow reached an all-time high. And directory revenue
growth led that industry again.
"The charge we're taking this quarter reflects our continued focus on
streamlining operations to reduce costs," Lillis said. "Within the next year,
we expect to recoup the $35 million through costs savings."
Proportionate operating highlights for the quarter by line of business
include:
- CABLE AND TELEPHONY: Subscriber growth of 6 percent for MediaOne, the
Atlanta cable operation, exceeded the industry average for the seventh
consecutive quarter. MediaOne ended the quarter with 511,000 customers. This
strong subscriber growth produced revenue of $60 million, an 11-percent
increase on a comparable basis to last year. Operating cash flow was $28
million, an 8-percent increase.
Meanwhile, Media Group's investment in Time Warner Entertainment (TWE)
generated operating cash flow of $151 million, a 12-percent increase from
third quarter last year. Media Group's international properties also produced
strong subscriber growth. Those ventures now serve 647,000 subscribers, a
41-percent increase on a comparable basis.
- WIRELESS: For the first time ever, operating cash flow margins in
domestic cellular operations passed the 45-percent mark, driven by subscriber
growth and operational efficiencies. For the quarter, operating cash flow
increased 48 percent, to $113 million. The subscriber base increased 43
percent to 1.7 million customers. International wireless operations also
exhibited strong customer growth. Media Group's international properties now
serve 419,000 wireless customers, a 55-percent increase.
- DIRECTORIES: U S WEST Direct continues its strong revenue growth.
Boosted by a 4-percent increase in revenue per advertiser, U S WEST Direct
reported revenue of $274 million, a 7-percent increase from the same period
last year.
For the quarter, Media Group reported net income of $18 million, or 4 cents
per common share.
U S WEST Media Group is involved in domestic and international cable and
telephony, wireless communications, and directory and information services.
For 1995, U S WEST Media Group reported proportionate revenues of $5.1
billion. Media Group is one of two major groups that make up U S WEST, a
company in the connections business helping customers share information,
entertainment and communications services in local markets worldwide. U S
WEST's other major group, U S WEST Communications, provides telecommunications
services to more than 25 million customers in 14 western and midwestern
states.
Some of the information presented in or in connection with this announcement
constitutes "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Although the Company believes that
its expectations are based on reasonable assumptions within the bounds of its
knowledge of its business and operations, there can be no assurance that
actual results will not differ materially from its expectations. Factors that
could cause actual results to differ from expectations include: (i) a change
in economic conditions in the various markets served by the Company's
operations that could adversely affect the level of demand for cable,
wireless, directory or other services offered by the Company, (ii) greater
than anticipated competitive activity requiring new pricing for Company
services, (iii) higher than anticipated start-up costs associated with new
business opportunities, (iv) regulatory changes affecting the
telecommunications industry, (v) increases in fraudulent activity with respect
to wireless services, or (vi) delays in the development of anticipated
technologies, or the failure of such technologies to perform according to
expectations.
Note: This release and the attached tables are available on the Internet by
accessing U S WEST's Internet site: www.uswest.com
KEY SELECTED PROPORTIONATE OPERATING HIGHLIGHTS
BY LINE OF BUSINESS
(ALL CHANGES ARE IN COMPARISON TO 3Q 1995)
CABLE AND TELEPHONY
MEDIAONE
- - 511,000 customers, a 6% increase
- - Revenue of $60 million, an 11% increase on a comparable basis
- - Operating cash flow of $28 million, an 8% increase
INTERNATIONAL
- - 647,000 subscribers, a 41% increase on a comparable basis
- - Revenue of $57 million, a 78% increase
- - Operating cash flow loss of $10 million*, unchanged from a year ago
TIME WARNER ENTERTAINMENT (TWE)
- - A 4% cable subscriber increase
- - Revenue of $693 million, a 17% increase
- - Operating cash flow of $151 million, a 12% increase
WIRELESS
U S WEST CELLULAR
- - 1.7 million customers, a 43% increase
- - Revenue of $286 million, a 29% increase
- - Operating cash flow of $113 million, a 48% increase
- - Operating cash flow, as a percent of net operating revenue, of 45%
INTERNATIONAL
- - 419,000 subscribers, a 55% increase
- - Revenue of $111 million, a 48% increase
- - Operating cash flow of $4 million*, compared to break-even last year
DIRECTORY AND INFORMATION SERVICES
U S WEST DIRECT
- - Revenue of $274 million, a 7% increase
- - Operating cash flow of $137 million*, a 7% increase
INTERNATIONAL
- - Revenue of $54 million, a 93% increase
- - Operating cash flow of $6 million*, compared to a loss of $3 million last
year
U S WEST MEDIA GROUP COMBINED GAAP RESULTS
- - Revenue of $694 million
- - Operating cash flow of $231 million
- - Net income of $18 million
- - Earnings per common share of 4 cents
* Reported proportionate operating cash flow has been normalized to exclude
the effects of charges of $25 million for U S WEST Direct and $10 million for
U S WEST International.