NEW YORK — The impact of cost-cutting and a one-time gain on the sale of an investment helped Tele-Communications Inc. slash its net loss to $22 million in the third quarter, from $138 million a year earlier, it said Friday, on 6% lower revenue of $1.9 billion.
TCI’s sale of its 20% stake in Intl. Family Entertainment Inc., held by its programming affiliate Liberty Media, was the primary reason for a $338 million one-time profit recorded by the cabler in the quarter. The revenue slide was due to the spinoff of TCI’s satellite business and the reshuffle of ownership of its electronic shopping interests, TCI said.
The Hindery factor
Still, the quarterly result also showed that efforts by TCI’s new president, Leo Hindery, to cut costs and change TCI’s culture in its core cable operations is having an impact. Despite continued increase in programming costs, a 25% reduction in overhead expenses helped TCI’s cable operations increase earnings before interest, taxes, depreciation and amortization by 21%, to $712 million, on 4% higher revenue of $1.6 billion.
“I’m quite pleased with the third quarter. Its traditionally a slow quarter, and yet we did exactly what I hoped we would do,” Hindery told reporters on a conference call. TCI stock rose 81¢ Friday, to close at $24.
Adjusted for various acquisitions and sales in the past year, the cash flow growth was 12.7% on 4.4% higher revenue, however. The cabler attributed the growth to higher cable rates and advertising revenue growth.
Despite the improvement, the quarter showed that TCI is yet to slow its loss of customers, with 47,000 subscribers terminating their service during the quarter, although system acquisitions offset the decline and left the cabler with 14.3 million subscribers as of Sept. 30.
Hindery said the subscriber drain had turned around in September, when 30,000 subscribers were added. He said October and November had showed growth and he predicted that TCI would add 60,000 to 75,000 subscribers in the fourth quarter.
The subscriber count will drop dramatically next year when TCI completes all the system sales it has negotiated with fellow cablers in exchange for stock and transfers of debt. TCI said Friday that the eight deals announced so far have transferred 3.1 million cable subscribers and $4.2 billion of debt out of TCI, helping the cabler dramatically improve its balance sheet ratios.
Hindery told reporters Friday that four more deals have been concluded but not announced.