Cablevision Stock Hits 52-Week Low
Subscriber Losses Spook Market
By Mike Farrell -- Multichannel News, 11/8/2007 7:00:00 AM
Cablevision Systems, just two weeks after a bid by its ruling Dolan family to take the company private was rejected by shareholders, released third quarter earnings Thursday that beat many analysts’ estimates, but still managed to spook investors who drove the stock to a new 52-week low.
Cablevision lost 16,000 basic customers in the third quarter – slightly ahead of many analysts’ estimates – and reported revenue growth of 9% to $1.5 billion and adjusted operating cash flow growth of 15.6% to $494.3 million. But that wasn’t enough to appease investors, rattled by the across-the-board basic subscriber declines at publicly traded cable companies and the threat of satellite TV and telco video competition.
Cablevision stock dipped as low as $25.57 per share (under its previous 52-week low of $26.43 each) on Thursday. The stock was trading at $25.95 in afternoon trading Thursday, down 2% or 58 cents per share.
Cablevision wasn’t the only cable stock to hit a new low-point on Thursday – Charter, Comcast and Time Warner Cable all hit new 52-week lows, for the second time in about two weeks.
Despite the basic customer losses – mainly due to seasonality because of its exposure to resort areas on Long Island, N.Y. and the New Jersey shore – Cablevision managed to show strong growth in telephony customers additions (91,000) and high-speed Internet services (52,000 additions). Cablevision also added 35,000 digital video customers, bringing its industry-leading digital penetration to 83% of basic subscribers.
Another bright spot was its Rainbow Media Holdings programming arm – including AMC, IFC and WE tv – which reported a 22% increase in advertising revenue and a 41.5% increase in adjusted operating cash flow in the period.
In a research report, Sanford Bernstein cable and satellite analyst Craig Moffett wrote that the Rainbow networks provided the “fireworks” for the quarter. But he added that given Cablevision’s exposure to aggressive telco video provider Verizon Communications (Verizon covers about 25% of Cablevision’s total footprint) the results in the cable division were “significantly better than many had feared.”
On a conference call with analysts Thursday, Cablevision CEO James Dolan wasn’t taking any questions about the failed going-private bid – he said it was an affirmation of shareholder confidence in management and the company. But Dolan did say that the company’s use of its free cash flow – estimated by some analysts to reach $500 million by 2008 – will be “a competition between reducing debt, reinvestment in the business and growth opportunities.”
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