Cablevision profit rises on Web subscribers

NEW YORK (Reuters) - Cablevision Systems Corp posted a higher quarterly profit on Thursday as it added more Internet and telephone customers.

But the New York-based cable operator also lost more video customers than expected and posted a reduction in the number of total products sold for first time in recent years as pressure from the weak economy hurt growth.

"For the first time, there are signs that Cablevision's past success is finally catching up with it," said Bernstein Research analyst Craig Moffett.

Cablevision, which has more than 3 million customers overall, added 9,600 Internet subscribers and 9,300 phone subscribers during the quarter. But it lost 24,500 basic video customers.

Analysts at Bernstein Research had forecast Internet additions of 12,000 subscribers and phone additions of 18,000 subscribers. Bernstein had also expected Cablevision to lose just 14,000 basic video customers.

Cablevision has one of the highest penetration rates for selling combinations of video, Internet and phone services to customers in its area -- relative to other cable companies. This could end up being a disadvantage for growth going forward, said Moffett.

"Cablevision faces a greater risk of saturation than any of its peers," he said.

Cablevision had been locked in a high-profile programing fee dispute with News Corp which resulted in the blackout of Fox local stations in New York and Philadelphia for 15 days until the two sides resolved their differences last week.

While the company declined to say how many customers in the current quarter had canceled their subscriptions due to the Fox outage, Cablevision President Tom Rutledge said the standoff was justified.

"Our behavior was not uneconomic," Rutledge said on a conference call. "We were doing a rational thing." He explained that the number of losses was justified by the kind of deal it was able to reach with Fox.

Third-quarter net profit was $112.1 million, or 37 cents a share, compared with $98.9 million, or 33 cents a share, a year ago.

Revenue rose 5.6 percent to $1.81 billion.

Analysts on average had forecast profit of 41 cents a share on revenue of $1.79 billion, according to Thomson Reuters I/B/E/S.

Cablevision has been successful in driving up the average revenue per user by 5.7 percent to $149.04.

Shares of Cablevision were up 3 percent at $28.46 on the New York Stock Exchange at midday.

(Reporting by Yinka Adegoke and Paul Thomasch, editing by Derek Caney and Matthew Lewis)