its customer service functions. The Company plans to improve and upgrade its
technical plant, which should allow it to provide a wide array of new services
and service tiers, as well as integrate new interactive features into advanced
analog and digital set-top consumer equipment. The Company also plans to develop
and provide new cable and broadband services and develop ancillary businesses
including digital video and high speed Internet access services.
Revenues. The Systems' revenues are primarily attributable to subscription
fees charged to subscribers for basic and premium cable television programming
services. Basic revenue consists of monthly subscription fees for basic and
CPST satellite services. Multiple dwelling unit accounts typically are offered
a bulk rate in exchange for single point billing and basic service to all units.
Premium revenue consists of monthly subscription fees for programming provided
on a per-channel basis. In addition, other revenue is derived from new product
tiers, pay-per-view fees, installation and reconnection fees charged to
subscribers to receive service, monthly equipment rental fees, advertising
revenue and commissions related to the sale of goods by home shopping services
and in home wiring service contracts.
Service Costs. Service costs are comprised of variable expenses directly
attributable to the Systems. Variable operating expenses consist of costs
directly attributable to providing cable services to customers and therefore
generally vary directly with revenues. Variable operating expenses include
salaries and related costs of service and technical personnel, programming fees
paid to suppliers of programming included in the Systems' basic and premium
cable television services, as well as expenses related to maintenance of cable
plants, vehicles costs, pole rents and electricity.
Selling, General and Administrative. Selling, general and administrative
expenses include, among other things, salaries and related costs of office and
customer service personnel, insurance, telephone, marketing, billing, taxes,
copyright and franchise fees and corporate overhead.
Depreciation and Amortization. Depreciation and amortization include
depreciation of the Systems' network and equipment, amortization of goodwill and
intangible assets and losses or gains recognized on the disposal of assets.
SIX MONTHS ENDED JUNE 30, 1998
The Systems passed 180,561 homes, had 126,985 basic subscribers and had
60,189 premium service units at June 30, 1998.
Revenues. The Company had revenue of $12.9 million for the six months
ended June 30, 1998. This revenue represents the revenue of the Systems for the
period from April 9, 1998 to June 30, 1998. Revenue per basic subscriber per
month was $37.29.