D.C. Memo: S&P Downgrades WOW! Based on Cash Drain, Mounting Broadband Sub Losses

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Downgrade: S&P Global downgraded its second cable broadband provider within the past 10 days. First, it was Cable One to see its outlook downgraded to negative. On Friday, it was WideOpenWest's turn. "WOW! is in a worse competitive position than its peers," S&P Global said. "We believe it will be increasingly challenging for WOW to improve performance over the next two years because of a deteriorating market position as both fixed wireless access (FWA) and fiber-to-the-home (FTTH) broadband service take share." WOW! lost 4,700 broadband subs in the second quarter to end with 485,000 total. S&P Global said WOW! was basically running out of money. "As of June 30, 2024, the company had about $21 million of cash on balance sheet but no availability under its $250 million revolving credit facility due Dec. 2026." The only reason WOW! came close to positive free operating cash flow in the second quarter was "primarily due to a sizeable pull back in its expansion capex spend, which will hurt WOW!'s longer-term competitive positioning," S&P Global said. WOW! has options. It could take on debt, "albeit at high rates," sell some assets, or receive third-party investments, S&P Global said. In May, WOW! said it received a buyout offer from DigitalBridge Investments and Crestview Partners at $4.80 per share. WOW! CEO Teresa Elder has repeatedly declined to provide details about the offer other than that it was being reviewed by a board committee. WOW! shares closed Friday at $5.62 per share.