Bethpage, N.Y.-Cablevision Systems Corp. CEO James Dolan defended his company's depressed stock price at last Tuesday's shareholders' meeting, and said that Cablevision must distinguish itself as more than just a cable company.
Cablevision shares, which had traded as high as $86.87 each in the past 52 weeks, closed at $66.75 last Tuesday.
Dolan told shareholders that the cable sector in general has been down this year, even though Cablevision is going strong. Its last quarterly report declared the company's ninth consecutive quarter of double-digit cash-flow growth.
So Cablevision is hoping to change investor perception of the company as just a cable stock, especially after its Rainbow Media Holdings Inc. programming subsidiary issues a tracking stock later this year.
"[Cablevision] has to further distinguish itself as more than just a cable company, to be a technology, entertainment and programming company," Dolan said.
Dolan also said Cablevision was evaluating what to do with Madison Square Garden, and all options are being weighed.
In at least one interview published earlier this year, Dolan indicated that he was in favor of replacing the venerable Manhattan arena with a new venue that would generate more revenue. Replacing the Garden is an option, he said last week, but a final decision has not been made.
"We have not come to a conclusion whether to build, refurbish or move to a different site," Dolan said of the arena. "We don't have all of the facts in. As the facility is past its 30th birthday and with new designs and technology in arena construction, the potential for achieving greater returns on investment is there. We will take a look at that versus the cost of expending capital."
Dolan also defended the company's The Wiz electronics retail stores, which one investor characterized as a loss-leader. Although The Wiz is losing money, Dolan explained that the strategy behind owning the chain was more than just selling consumer electronics.
"We would like to see The Wiz do financially better than it is doing," he said. "The purpose of The Wiz acquisition was not to get into the consumer-electronics business. The asset itself works well with the assets and resources Cablevision owns."
One bright spot, he added, is that The Wiz is selling a large number of cable modems, which are self-installed by consumers. In addition to increasing Cablevision's high-speed-data customers, this avoids the cost of sending out installers. Dolan estimated that a truck roll for a modem installation can cost $250 to $500.
Dolan spent much of the meeting fielding questions on issues related to various public-access stations on Long Island, N.Y.
He said the cable systems were limited in the amount of resources and capacity they can devote to public-access issues. But he added that access remains a priority for Cablevision, which appeared to have calmed most of the attendees' fears.
"Public access is complicated and difficult," Dolan said. "Bandwidth is a limited resource. We are moving to a digital environment, which should improve our capacity."
Dolan added that Cablevision doesn't currently promote its public-access channels because it would be frustrating to all parties involved if the company was to try to attract more participation in a medium that is already near its saturation point.