S&P: Mediacom on watch

Standard & Poor's placed its ratings on Mediacom Communications Corp. and subsidiaries on CreditWatch negative.

S&P placed on watch Mediacom's senior unsecured debt at B+, Mediacom Broadband LLC's corporate credit rating at BB and senior unsecured debt at B+, Mediacom LLC's senior unsecured debt at B+, Mediacom Broadband Group's corporate credit rating at BB and senior secured bank loan at BB+, Mediacom Midwest Group's senior secured bank loan at BB+ and Mediacom USA Group's senior secured bank loan at BB+.

"The action is based on concerns about the company's weakened business profile, reflected by a 4.4% year-over-year loss of basic video subscribers as of June 30," said S&P credit analyst Eric Geil. "Customer erosion stems from rising availability of direct-to-home satellite-delivered local broadcast TV channels, which reach 89% of Mediacom's homes passed, up from 62% at year-end 2003 and 15% in the latter part of 2002."

S&P said Mediacom's credit measures are less supportive of the ratings given rising competition. Increased promotional and subscriber retention efforts, which include service discounts, may weigh on profitability in the near term. Longer-term results of these initiatives are uncertain because customer churn could rise after discounts expire.

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