Cable revenue and cash flow were up during the second quarter at Cablevision
Systems Corp., but the MSO warned analysts that growth in its cable systems
would not meet earlier expectations.
Cable revenue was up 10 percent to $551 million and operating cash flow rose
9 percent, slightly below the industry average, to $227 million.
Cablevision also revised its cable systems' cash-flow guidance for the year
from between 13 percent and 15 percent to between 11 percent and 13 percent. The
company reaffirmed its revenue guidance for cable at 10 percent to 12 percent
Cablevision attributed the lower cash-flow guidance to an aborted plan to
lease cable modems to customers, a sluggish ad market and increased costs at its
Executive vice president of finance Andrew Rosengard said in a conference
call with analysts that the MSO planned to start a modem-leasing program this
year but decided not to because of strong retail sales of the product. He added
that the previous cash-flow guidance included anticipated lease revenue for the
Rosengard added that call-center costs rose mainly due to strong sales of its
high-speed-data service in the fourth quarter, which spilled over to the
subsequent periods and forced Cablevision to pay for additional overtime and to
hire outside contract workers.
Cablevision added about 64,000 high-speed-data customers in the quarter,
ending the period with 368,000 customers.
Basic-subscriber growth was sluggish at 1.3 percent for the period.
Cablevision also reduced its guidance for basic growth for the year to 1 percent
from 1.75 percent.
CEO Jim Dolan said Cablevision's long-awaited digital-cable rollout should
begin in September, but he gave no further details.
'We will have more to share in the coming weeks,' he added.
Cablevision's stock was down $2 per share to $51.85 each in afternoon trading