Facing Increased Competition, Cablevision Sheds 68K Subscriptions


Cablevision continued to struggle with increased competition and its own past success in the third quarter, reporting its biggest basic video losses since the fourth quarter last year — when its service territory was devastated by Superstorm Sandy.

The New York metro area’s predominant distributor also is calling an end to repetitive pricing promotions.

Cablevision shed 37,000 basic-video customers — its biggest video losses since the 50,000 customer drops in fourth quarter of 2012. But some analysts were more troubled by the MSO’s losses in high-speed data customers — down 13,000 in the period — and phone subscribers — a decrease of 18,000.

“Losing subscribers in all three products is shocking and speaks to either rising competition from Verizon FiOS or worsening product positioning,” wrote Nomura Equity Research analyst Adam Ilkowitz in a note to clients.

Others were equally disturbed by the heavy decline in Primary Service Units, a combination of video, voice and data additions. PSUs, which usually skew positive as high-speed data and phone additions make up for video losses, were negative 68,000 in the period.

ISI Group media analysts Vijay Jayant and David Joyce wrote that while average revenue per unit was up in the period — one of the few bright spots in the quarter – the PSU losses were too big to ignore.

“With capital returns still on hold (other than the dividend), the positive ARPU trends are off set by significant subscriber losses, and as such, we remain on the sidelines,” the analysts wrote.

Investors seemed worried as well — Cablevision shares were down almost $1 per share (6%) in early trading Friday.

On a conference call with analysts to discuss quarterly results, Cablevision CEO James Dolan said the video subscriber losses were in part due to the company’s strategy to end what it called repetitive pricing promotions, where customers move back and forth between providers and deals.

Dolan also said that the strategy will extend into retention — so customers that threaten to leave won’t receive a price cut just to remain on the subscriber rolls. Instead, he said the Bethpage, N.Y.-based operator will focus instead on improving the customer experience and connectivity to its products.

Cablevision has struggled of late to squeeze more growth out of its industry leading penetration rates and aggressive competition from telco Verizon Communications’ FiOS product.

The declines also led to a 4% dip in adjusted operating cash flow for the company, as revenue increased 1.8% to $1.6 billion in the period.

On the customer service side, Dolan said Cablevision reduced total call volume by 8% year-over-year, truck rolls by 28% and repeat trouble calls by 40% in the same time frame.

While noting that the “crystal ball is pretty murky,” Dolan added that Cablevision is seeing an increase in data usage by customers, particularly younger ones. As usage and connectivity become more important to the customer base, it creates opportunities for a company with strong customer service and a reliable network.