Cablevision Systems Corp. stock was pounded Tuesday after the MSO announced
that it lost nearly 12,000 subscribers in the first quarter and reduced its 2003
cash-flow guidance based on increased costs from a recent deal to carry Yankees
Entertainment & Sports Network.
The company's stock dipped more than 7 percent ($1.56 per share) to $20.24
each in 4 p.m. trading.
Cablevision lost 11,600 subscribers in the quarter ended March 31. But in a
conference call with analysts, cable and communications division president Tom
Rutledge said the Bethpage, N.Y.-based MSO added 4,700 customers in March, 6,500
in April and 6,300 so far in May. To date, Cablevision has added 1,200 basic
Cablevision CEO James Dolan said that in light of the recent subscriber
increases, the MSO was on track to meet its guidance of 0.5 percent subscriber
growth for the year.
Companywide revenue increased 7.8 percent in the quarter to $982.2 million
and cash flow was up 36 percent to $299.2 million.
But Cablevision reduced year-end cash-flow guidance for the year between 18
percent and 20 percent to between 16 percent and 18 percent, primarily due to
increased programming costs associated with its agreement to carry YES.
At the cable operations, revenue rose 7 percent to $633.8 million and cash
flow increased 12 percent to $246.7 million.
Digital and high-speed-data subscriber growth was strong in the quarter.
Cablevision nearly doubled its iO: Interactive Optimum digital customers to
401,400 in the period, up by nearly 185,000. The MSO added 82,700
high-speed-data customers, bringing its total number to 852,800.
Its Rainbow Media Holdings Inc. division -- comprised of AMC, The Independent
Film Channel, WE: Women's Entertainment and several regional sports networks --
had substantial gains in the period: Revenue was up 16 percent and cash flow was
up nearly fivefold from $8 million in 2002 to $39 million, mainly due to
Regarding its direct-broadcast satellite venture, Dolan said the MSO has
received permission to delay the launch of its satellite until Aug. 31. He said
Cablevision has earmarked about $80 million for the venture this year, adding
that the MSO continues to look at its strategic options.
"We will continue to consider all of our options," Dolan said during a
conference call. "We will seek to maximize the value of the asset and will
continue to take advantage of strategic opportunities."
Rutledge also downplayed concerns that Verizon Communications' new
digital-subscriber-line pricing strategy -- to $34.95 per month -- would cut
into Cablevision's high-speed-data customer base.
"There has been no effect yet," he added.