Cablevision eyes costs from Sandy, shares fall
(Reuters) - Cablevision Systems Corp reported a third-quarter loss on Tuesday and its shares fell over 5 percent as investors worried about a decline in video customers and the financial impact of Hurricane Sandy.
The cable provider said costs from Sandy, which knocked out service for as many as half its customers, would be substantially higher than its $16 million bill from hurricane Irene in 2011.
Cablevision also said that it is exploring the possibility for a sale of cable assets in four western U.S. states that it bought for $1.4 billion in 2010, after it received unsolicited inquires about the business.
Like bigger operators Comcast and Time Warner Cable, Cablevision has been losing customers to rivals such as satellite television provider DirecTV and telephone operator Verizon Communications.
Cablevision lost 10,000 video customers in the quarter, compared with analysts' expectations for a loss of 9,000, but it added 28,000 Internet customers, ahead of the Wall Street target of 23,000, according to StreetAccount.
Investors are worried about the impact of Sandy-related costs on fourth-quarter results and whether storm-related service outages will make it difficult for the company to raise its prices, according to analysts.
"With a long and costly recovery from the storm ahead, and with a longer term growth challenge that seems intractable, we continue to struggle to see the bull case for Cablevision," Bernstein analyst Craig Moffett said in a research note.
At the end of the third quarter, the U.S. Northeast, Cablevision's main operating region, was hit by Sandy, which caused widespread flooding and power outages that disrupted cable and telephone services.
Cablevision, which promised to rebate customers for their time without cable service, is working to restore service to customers affected by the storm which made landfall on October 29. It said its biggest challenge is power outages, which cut off its service.
While most of the financial impact from Sandy will hit fourth-quarter results, Cablevision executives said on a conference call with analysts that the effect may extend into 2013 in the case of customer homes that will not be repaired after the storm.
Hudson Square research analyst Todd Rethemeier, who looked for the company to add video customers in the third quarter, said Cablevision was being hurt by the weak economy as well as competition.
"Until the economy recovers and the number of housing units starts to grow again it will be tough to see significant subscriber growth," Rethemeier said.
Also on Tuesday, DirecTV said it added 67,000 video subscribers, and another satellite TV provider, Dish Network Corp, reported 19,000 subscriber losses in the quarter.
Previously, Verizon had reported 136,000 FiOS Internet customer additions and 119,000 FiOS video customers.
Cablevision posted a loss of $3.8 million, or 1 cent per share, compared with a profit of $39.3 million, or 14 cents per share, in the year-earlier quarter. Included in the latest quarter was $61.1 million of debt refinancing costs.
Excluding unusual items, earnings per share were 23 cents, compared with Wall Street expectations for 16 cents, according to Thomson Reuters I/B/E/S.
Revenue rose to $1.69 billion from $1.67 billion, meeting Wall Street expectations, according to Thomson Reuters I/B/E/S.
Cablevision executives did not give details on the call about potential bidders for its western U.S. business, previously known as Bresnan Broadband.
Cablevision, which first announced in May this year that it was looking for strategic alternatives for its Clearview Cinemas chain, said on Tuesday that it is still exploring its options.
Cablevision shares were 88 cents lower, down 5.3 percent, to $15.65 in early afternoon trading on the New York Stock Exchange.