Cablevision Systems reported fourth quarter revenue increased 4.5 percent to $1.58 billion, while full-year revenue increased 1.6 percent to $6.23 billion.
Like most of its peers, Cablevision has been losing basic video subscribers – 18,000 in the most recent quarter. Unlike its peers, which often tend to compensate for video losses with broadband customer gains, it managed a net gain of only 6,000 Internet subscribers (VoIP was flat). In total, Cablevision lost a total of 7,000 customer connections.
That might not have been so bad, given that Cablevision Cablevision’s market is pretty close to saturation in all services, it comes up head to head with Verizon FiOS far more often than any of its peers do, and it has deliberately become less aggressive with promotional pricing, despite increased promotional pricing from Verizon.
The company has established better price discipline, and is offering fewer repetitive promotions, CEO James Dolan said on the company’s conference call with analysts. He said that has actually led to fewer customer disconnects.
“We started in August with not extending the perpetual promotional pricing – the ‘no soup for you’ strategy. We’re seeing significant retention, of people sticking with us five to six months out after calling us after the original 36 months,” said Kristin Dolan. Win-backs are good, she said.
As for future growth, Dolan said “connectivity is the most important product to our customers, versus historically, which used to be the video product. As we see that continue to evolve, I think there will be growth opportunities inside of that.” He talked about the company’s growing network of Wi-Fi hotspots as an advantage. He noted the increasing popularity of broadband-enabled wearable devices.
The company also expects the Lightpath business services unit will also grow.
ARPU was up by $6.43 – to $147.34 for several reasons, including the discontinuance of promotions, and migrating some customers to higher tiers of service.
Dolan said the company has deployed its Onyx platform, which includes the updated Optimum program guide with a consistent interface across all products.
The company is also investing in improving its network. Dolan said the company has enhanced network monitoring. “Now when an outage occurs, we reach out to our customers proactively, so they know we are already working on the outage.” This has led to “substantial” reduction of customer trouble calls and reduction of truck rolls.
When asked about ongoing efforts to increase the efficiencies in the network, Dolan responded that the only goal was not only to reduce cost, but to make everything more efficient for the customer, including reducing truck rolls. “Most of what we did was make the customer happier, and that’s what we’re pursuing, and there’s more opportunity for harvesting that benefit for the customer,” he said.
Capex for the year was lower than in 2012, the company noted. Dolan expects that capex will likely be the same in 2014 as it was in 2013.
Company executives said that they understand that industry consolidation is of interest, but that they would not respond to any questions on the subject.
Cablevision is one of the last publicly held MSOs of size out there, and operates in prestige markets in and around New York City, which has made it an object of takeover speculation long before John Malone started agitating for consolidation last summer.
The company also begged off any questions about Aereo. The legality of the Aereo approach will be based, at least in part, on how the Supreme Court interprets how analogous Aereo’s approach is to the network DVR approach that Cablevision established through earlier legal proceedings.
In response to a question about Netflix that was inspired by recent news of Comcast’s peering agreement with Netflix, Cablevision executives said they are “really happy” with Cablevision’s relationship with Netflix. Cablevision is one of the first to sign up for Netflix’s OpenConnect program, which is a cache-and-deliver approach, versus a peering interconnect.
The MSO lost 18,000 video subs in its fourth quarter, with a net gain of only 6,000 Internet subscribers. With minimal opportunity to grow subscriber numbers, the company is trying to make everything more efficient for the customer. “Most of what we did was make the customer happier, and that’s what we’re pursuing," CEO James Dolan said.