Cablevision Systems actually added basic video subscribers in its first quarter – 7,000 of them – along with approximately 42,000 customers each for its broadband and voice services.
The company was able to attract new video customers with discounted offers (a triple-play bundle at a two-year promotional price of $70, with an iPod Touch thrown in) that ultimately resulted in a reduction of cash flow, leading some analysts to cut their ratings on the company’s stock.
Growth in broadband and voice subscribership was responsible for marginal revenue growth, barely compensating for increased operating costs, largely for programming, the company said. First-quarter net revenue was just barely up, by a razor-thin 0.2 percent to $1.66 billion.
Net income in Q1 2012 was $57.2 million, compared with $104.1 million in Q1 2011. The 2011 figure includes $35 million in net income from AMC Networks, which was spun-off in mid-2011.
Average monthly revenue per basic video customer was up nearly 3 percent from the like quarter a year ago, to $152.53. On the other hand, overall ARPU was down more than a dollar.
The company’s spending on capital equipment was up sharply in the quarter, with significant increases in spending on upgrades/rebuilds, “scalable infrastructure,” consumer premises equipment and other technology. The company expects to continue to make technology investments through the rest of the year.
Cablevision President and CEO James Dolan said: "Our customers are responding positively to our ongoing efforts to expand and improve the products we offer, such as the recent introduction of our Optimum app for laptops, as well as our continued investment in Wi-Fi. Finally, we are making changes in the level of service and communication we provide to our customers to strengthen our relationships with them. We firmly believe that these investments will benefit the company and deliver greater value to our shareholders over the long term."
The company has been repurchasing its stock, and its board has just approved an additional $500 million for share repurchases.
The achievement aggravates analysts, however, since it was based on promotional pricing that compromised cash flow.