Comcast, Cox get queries from SEC

NEW YORK — NEW YORK - Comcast Corp. and Cox Communications Inc., the largest and fourth-largest U.S. cable-television operators, said yesterday that the Securities and Exchange Commission has asked them for information about how they count subscribers.

About 20 telephone, wireless and cable TV companies have been asked about subscriber data by the SEC, according to a person familiar with the matter. Comcast and Cox received SEC inquiries last month, said Comcast spokeswoman D'Arcy Rudnay and Cox spokesman Bobby Amirshahi. Both declined to comment further.


The companies could be hurt by disclosure that they have fewer subscribers because investors use the figures to measure potential revenue growth, said Aryeh Bourkoff, an analyst at UBS Securities LLC. Investors have more closely scrutinized customer levels after Adelphia Communications Corp.'s founders were accused of inflating its numbers, he said.

"Given that cable operators are valued on a subscriber basis, it could have significant effect," Bourkoff said in a research note to investors. "We do not expect any adjustments" to the number of subscribers at these companies, he said.


Verizon Communications Inc., SBC Communications Inc., BellSouth Corp. and Alltel Corp. received letters from the SEC seeking customer data as part of the agency's informal inquiry.

Verizon, the largest U.S. local-telephone company, said yesterday that it had overstated long-distance customer lines by 1.5 million, or 9 percent, because of a database flaw. The New York-based company said it discovered the error before it got the June 18 SEC letter.

"We're concerned because long-distance is perceived as a retention tool" for keeping Verizon's local-phone customers from switching to other phone carriers, including cable companies, said Todd Rosenbluth, an analyst at Standard & Poor's Equity Research in New York. He rates Verizon shares "hold" and doesn't own them. "This doesn't affect their revenue."

Comcast, based in Philadelphia, said in April that it had 21.5 million customers for its basic cable TV service, a package of networks that includes Viacom Inc.'s CBS and Walt Disney Co.'s ESPN channels, at the end of the first quarter. Those customers pay Comcast about $49.31 a month on average for cable TV. The company also said it had 1.25 million phone customers.

Cox said it had 6.4 million basic video customers and 1.1 million phone customers as of March 31.

Shares of Comcast rose 13 cents to close at $27.96 yesterday on the Nasdaq stock market. Shares of Atlanta-based Cox fell 16 cents to $27.75 on the New York Stock Exchange.

After seeing New York Attorney General Eliot Spitzer take the lead pursuing cases over analyst conflicts and mutual fund trading abuses, the SEC has decided to push harder to uncover malfeasance at companies, said Russell Ryan, a partner at King & Spalding in Washington and a former enforcement lawyer for the SEC.

"The [SEC's] enforcement division has made a decision to be more pro-active in ferreting things out at companies rather than being reactive," Ryan said.


Some newspaper publishers disclosed last month that they had inflated circulation numbers, angering investors.

Hollinger International Inc. said June 15 that it overstated circulation at the Chicago Sun-Times. Its shares had their biggest drop in more than eight years the next day.

Tribune Co., whose Newsday and Hoy papers on Long Island, N.Y., were found to have overstated sales figures, said circulation department executives at all 14 of its newspapers, will be required to verify the accuracy of their numbers every quarter. Tribune Co. also owns The Sun.

Time Warner Inc.'s cable unit hasn't received an inquiry from the SEC, spokesman Keith Cocozza said. Adelphia also hasn't been contacted, spokeswoman Erica Stull said.

Charter Communications Inc. and Cablevision Systems Corp. didn't return calls for comment.