Despite loss of subs, Cablevision posts Q3 profit
Cablevision bled subscribers across its video, data, and voices services, but still posted a profit in the third quarter.
On the video side, Cablevision lost 37,000 customers, which exceeded Street Account’s estimate of 17,200. Cablevision, which is facing increased competition from Verizon in the New York area that it serves, lost 13,000 data customers compared to the second quarter; analysts had projected an increase of 6,700. Cablevision, the nation’s fourth-largest cable operator that is controlled by the Dolan family, also lost 18,000 voice subscribers in the third quarter.
In addition to the competition from Verizon, Cablevision is also hampered by high penetration rates in its service areas. While the cable industry rumor mill has been churning with speculation that Charter Communications, backed by Liberty Media’s John Malone, is trying to buy Time Warner Cable, Cablevision appears to be a less attractive target if the Dolan family decides to sell.
“The company’s dismal Q3 results continue a string of poor reports,” wrote Craig Moffett, senior analyst for MoffettNathanson Research. “After holding the line on pricing for two years, CVC finally let prices rise. In short order, subscriber losses were worse than expected, falling in every category for the first time ex-Hurricane Sandy.
“All this simply illustrates Cablevision’s rock-and-a-hard-place position. Raise prices and subscribers fall. Hold the line and margins get crushed. Choose your poison.”
On the plus side, Cablevision’s net income was $294 million, or $1.10 a share, compared to a net loss of $3.8 million, or 1 cent a share, a year ago. Cablevision’s revenue increased 1.8 percent to $1.57 billion.
Cable television third quarter 2013 net revenues increased 1.8 percent to $1.407 billion, mainly due higher data rates, higher video revenues and increased advertising revenues, compared to the prior year period.
Cablevision’s advertising revenue grew 8.8 percent year-over-year while the commercial services division, Lightpath, saw its net revenues grow 1.7 percent from the same period last year to $82.65 million.
"Cablevision continues to enhance the overall Optimum experience for our customers with improved products and a superior level of service. At the same time, we have taken a number of steps to improve our financial performance and strengthen our balance sheet," Cablevision President and CEO James Dolan said in a statement. “We expect that the investments we are making in the business will yield results as we move forward."
In April, Cablevision sold Clearview Cinemas to Bow Tie Cinemas while Charter Communications bought the former Bresnan systems from Cablevision for $1.62 billion in cash. Cablevision shed Clearview and the Bresnan systems to raise capital and increase its focus on the New York metropolitan markets that it serves.
Cablevision said this morning that the financial results of Bresnan and substantially all of Clearview Cinemas were reflected in the company’s consolidated financial statements as discontinued operations for all periods presented.