Cablevision Stock Soars
Bucks Industry Trend With Basic Sub Gains in Q4
By Mike Farrell -- Multichannel News, 2/28/2008 4:09:00 AM
Cablevision Systems shares soared more than 7% ($2 each) in early trading Thursday after the operator reported strong fourth-quarter results, bucking the industry trend of basic subscriber defections with video customer adds.
Cablevision shares were trading as high as $28.90 per share (up $2 each) in early trading Thursday. The stock eased back to $27.76 (up 86 cents or 3.2%) in 11:32 a.m. trading on Feb. 28.
Cablevision’s addition of 1,155 basic subscribers was even more dramatic given the New York-centric cable operator’s exposure to Verizon Communications’ FiOS video service. Other cable operators have blamed competition from telcos like Verizon and satellite TV companies for their basic-subscriber declines.
Verizon, which has about 1 million FiOS video customers nationwide, has been particularly aggressive in 
Cablevision’s territory, adding 820,000 video passings in 2007, bringing its total marketable video passings in that area to 980,000, Cablevision chief operating officer Tom Rutledge said on a conference call with analysts. While Verizon does not reveal how many customers it has in a particular area, their presence has not appeared to have affected Cablevision.
For the quarter, cable system revenue increased 8.6% to $1.2 billion and adjusted operating cash flow rose 13.3% to $497 million. Cablevision also added 43,000 digital video customers in the quarter (bringing its digital penetration to an industry-leading 84%), 62,000 high-speed Internet customers (boosting penetration to 49% of homes passed, again tops in the industry) and 102,000 Optimum Voice telephony customers. Cablevision said on the conference call that one of every three homes in its service territory are Optimum Voice customers, with penetration of the service at 34% of homes passed, more than any other cable company.
At for its Rainbow Media Holdings national networks – AMC, IFC and WE tv – revenue was up 12% in the period to $179 million and adjusted operating cash flow declined 5% to $80 million. On the conference call, Rainbow CEO Josh Sapan said that the AOCF decline was expected due to increased film license fees and higher programming costs associated with its new original series. For the year, Rainbow reported revenue growth of 11% to $669 million and AOCF rose 14% to $308 million.
Rainbow has been the subject of some speculation after the New York Post reported Monday that Cablevision had hired investment banker Bear Stearns to evaluate the unit for a possible sale. On the conference call, Cablevision CEO James Dolan said that the company does not comment on speculation in the marketplace.
“We feel strongly about our programming services. They’re doing very well particularly this year with the new programming they’ve added,” Dolan said on the call. “We think they still work really well.”
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