Cablevision, Charter Gain in Q1


Cable’s first-quarter earnings
momentum continued in full force
last week, with both Cablevision Systems
and Charter Communications
reporting strong results, fueled by advanced-
services growth.

Cablevision, which reported results on
May 6, showed strong financial growth
fueled by gains in high-speed Internet
(42,600) and phone subscribers (42,300)
and surprisingly, a return to basic subscriber
growth, adding 900 customers in
the period.

At Charter, revenue rose 4.5% to $1.7
billion and cash flow increased 3.4% to
$637 million. The St. Louis-based MSO
lost about 23,400 basic video customers
in the period, but added 95,800 digital
customers (nearly four times the 25,600
additions in Q109), 104,000 high-speed
Internet customers (up from 71,900 in Q1
’09) and 67,000 phone customers (down
from the 74,300 added in Q1 ’09).

The strong results came about a week
after Time Warner Cable and Comcast reported
better than expected first-quarter
results led by big gains in high-speed data
customers. Comcast’s 399,000 HSI additions
in the first quarter — its biggest first
quarter gain ever — impressed analysts
who feared data growth was on a downward

Cablevision CEO James Dolan, on a
conference call with analysts last Thursday,
summed up the performance. “We’re
off to a very solid start,” Dolan said.

Analysts agreed. In a research note,
Sanford Bernstein cable and satellite analyst
Craig Moffett called the results outstanding,
noting that Cablevision beat
analysts’ consensus estimates soundly.
Moff ett was particularly impressed with
the basic-subscriber additions — he noted
that Cablevision has more video customers
today (3.06 million) than when
Verizon Communications first began
rolling out its FiOS TV product in 2003
(2.9 million). Although Cablevision has
the highest exposure to FiOS among the
other publicly traded cable operators,
Moffett noted that the worst may be over
for the company on the telco competition

The customer growth also helped fuel a
5.6% increase in revenue (to $1.3 billion)
at the telecommunications division and
a 7.8% bump in adjusted operating cash
flow ($593.4 million) at the Bethpage,
N.Y.-based operator.

Overall, including its Rainbow Media
programming arm and Newsday, Cablevision’s
revenue was up 5.2% to $1.8 billion
and adjusted operating cash flow
rose 7.6% to $610.4 million. Free cash flow
rose 32% to $240.5 million.

Charter chief financial officer Eloise
Schmitz added that the MSO is making
progress toward being listed on the NASDAQ
Exchange. The company has made
an application for listing on the NASDAQ
(under the symbol CHTR) and Schmitz
said it needs to add one independent
board member to its audit committee —
it already has two — to be in compliance
with NASDAQ rules.

Charter CEO Mike Lovett also tried
to downplay any speculation that chairman
Eric Zinterhofer’s plan to leave Apollo
Management (one of Charter’s biggest
bondholders) would have any effect on
the cable company. According to a report
in The Wall Street Journal, Zinterhofer —
backed by his in-laws, the Lauder family,
heirs to the Estée Lauder fortune — is
planning to raise between $500 million
and $1 billion for a new private equity
fund that would focus on investments in
the media and telecom sectors.

“Eric has communicated to me, as well
as to the rest of our board, that he will
continue as our chairman,” Lovett said
of Zinterhofer.