Release Date: April 29, 1998
Contacts: Steve Lang, 303-858-3406
Cathy Fowler, 303-858-3405
U S WEST MEDIA GROUP REPORTS TENTH CONSECUTIVE QUARTER
OF DOUBLE-DIGIT GROWTH IN OPERATING CASH FLOW
es high-speed data customers 35 percent, to 31,000, from last quarter -
- Introduces commercial phone service -
Grows revenue per cable subscriber by 8 percent -
ENGLEWOOD, Colo. - U S WEST Media Group (NYSE: UMG) today reported its tenth
straight quarter of double-digit growth in operating cash flow. Media Group is
changing its name to MediaOne Group as part of U S WEST's plan to split into
two separate public companies.
For the first quarter, MediaOne Group reported - on a proportionate basis:
o An 11.8 percent increase in operating cash flow, to $693 million. MediaOne
Group's operating cash flow for the first quarter 1997 was $620 million.
(Normalized operating cash flow grew 16.5 percent for the operations MediaOne
Group will hold after the planned split from U S WEST.)
Operating cash flow, which represents earnings before interest, taxes,
depreciation and amortization, is a key indicator of the company's operating
performance.
o An 11.4 percent increase in revenue, to $2.34 billion. MediaOne Group's
revenue for the first quarter 1997 was $2.1 billion. (Normalized revenue grew
18.6 percent for the operations MediaOne Group will hold after the planned
split from U S WEST.)
Because MediaOne Group operates numerous joint ventures, the company uses
proportionate accounting to reflect its share of operating revenues and
expenses associated with these operations.
"We're off to a good start for the year," said Chuck Lillis, MediaOne Group
president and chief executive officer. "Consumers continue to respond
positively to our high-speed data product, MediaOne Express. Penetration for
the product continues to increase in all of our high-speed data markets.
"Our telephone offerings are extremely competitive and, after just a few months
in the market, our penetration rates are exceeding our expectations, and our
international businesses are doing well," Lillis said.
"MediaOne Group is in strong financial position for the impending split of our
two businesses," said Richard McCormick, chairman and chief executive officer
of U S WEST, Inc.
Since the end of the fourth quarter:
o MediaOne Group closed a transaction that sent its domestic wireless
operations to AirTouch in exchange for $1.6 billion in AirTouch dividend-
bearing preferred stock with a 5.143% coupon and 59.5 million shares of
AirTouch common stock valued at $2.9 billion. MediaOne Group also
transferred about $1.4 billion of debt to AirTouch. Based on yesterday's
AirTouch closing price of $53.0625, the total value of the transaction is
$6.2 billion.
o U S WEST received a ruling from the Internal Revenue Service that its
split-off will be tax-free for the company and shareowners. The split-off
plan includes the transfer of U S WEST Dex to U S WEST Communications at
the split, removing $3.9 billion in debt from MediaOne Group's books and
delivering $850 million in equity to MediaOne Group shareowners in the
form of common stock in the new U S WEST. The split is anticipated by
mid-1998, pending shareowner approval.
Telewest (the U.K. cable and telephone venture in which MediaOne Group owns
26.8 percent) and General Cable agreed to the terms of a proposed merger
that will strengthen the strategic position of the combined group as a
leading cable operator in the United Kingdom, with interest in 43
franchises covering about 5.8 million homes, and serving 849,000 cable
customers, 1.1 million residential and 167,000 business telephone lines
(figures as of the end of 1997).
MediaOne introduced residential phone service in two markets: Atlanta and
Los Angeles.
MediaOne Group received nearly $80 million and 20 million shares from our
contribution to a newly formed company, PrimeStar, Inc., of 193,000
customers as part of the roll-up plan. MediaOne Group now owns about 10
percent of the new company.
First quarter operating highlights include:
o Domestic Broadband: MediaOne ended the first quarter with 4.9 million
cable customers, up 1.5 percent from last year's first quarter, normalized
for various transactions. Normalized revenue per cable subscriber
increased 8.3 percent, to $39.17 per month. In addition, MediaOne ended
the quarter with 31,000 customers for its high-speed data service,
MediaOne Express, the highest penetration rate of any major provider in
the U.S.
o International: Normalized venture-level results include 4.9 million
customers who have signed up for 5.6 million services, including 1.8
million cable accounts, 1.1 million phone lines, and 2.7 million wireless
accounts, an increase of 47 percent over the same period last year.
Proportionate operating cash flow from international wireless and
cable-telephone operations was $17 million during the period, compared with
last year's negative $1 million.
MediaOne Group's first-quarter net loss was $135 million, of which $492 million
related to pre-tax, noncash items. Net loss per basic and diluted common share
was 24 cents.
MediaOne Group, one of America's largest broadband communications companies, is
involved in domestic and international cable and telephony, international
wireless and directory and information services. For 1997, MediaOne Group had
proportionate revenue of $7.8 billion, pro forma for the AirTouch merger.
MediaOne 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 in 14
western and midwestern states. U S WEST has proposed splitting the two groups
into separate public companies. The split is anticipated by mid-1998, pending
shareowner approval.
###
[Safe Harbor statement: This document contains statements about expected future
events and financial results that are forward-looking and subject to risk and
uncertainties. For those statements, we claim the protection of the safe harbor
for forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995. Discussion of factors that may affect future results is
contained in our recent filings with the Securities and Exchange Commission.]
NOTE: This release and the financial statements will be available on the
Internet after 8 am (MDT) by accessing U S WEST's Internet site: www.uswest.com.
U S WEST Media Group - Selected Statistics
For the Quarter Ended March 31, 1998
Venture Level Operating Statistics (in thousands)
Subscriber/Lines Data (normalized)
Business Venture Homes Subscribers/ Net Adds Net Adds Growth Y/Y
Passed/Pops Lines Q1 1998 12 Months
Domestic
MediaOne
Cable 8,382 4,910 14 73 1.5%
High Speed Data 31 8 31
Time Warner Entertainment (1)
Cable 15,758 9,916 37 170 1.7%
High Speed Data 39 12 34
-----------
........... ============= ============= ===========
Total Domestic Broadband 24,140 14,896 71 308
============= ============= ===========
===========
International
International Cable & Broadband
U.K. & European Cable 4,334 1.626 2 90 5.9%
U.K. & European Telco 1.079 39 264 2.4%
Asian Cable 1.413 184 31 114 162.9 %
International Wireless
One 2 One 58,000 1,198 184 578 93.2%
Central European Wireless 64,200 1,429 251 718 101.0 %
Asian & Other Wireless 74,000 116 12 31 36.5%
Total International
........... ============ ============= =========== ==================
201,947 5,632 519 1,795 46.8 %
============ ============= =========== ==================
===========
Consolidated Financial Statistics (in millions)
Operating
Business Venture Revenue Growth Cash Flow Growth Margin
MediaOne
Core Cable $575 9.7% $261 10.6% 45.4 %
Total Broadband 619 12.1% 240 6.7% 38.8 %
<FN>
(1) MediaOne Group has 50% management control of TWE domestic broadband business and a 25.51% investment.
</FN>