Cablevision to raise Internet prices by $5

Thu Dec 6, 2012 5:00pm EST

* Price increases after Sandy could lead to churn-analyst

* Video, phone customers who also buy Internet to be affected

* Customers with promotions not affected by increases

By Liana B. Baker

Dec 6 (Reuters) - New York-based cable operator Cablevision Systems Corp said on Thursday it would increase its Internet prices by $5 in January, raising total monthly bills of most customers by 3.2 percent on average.

The company said in a statement that prices for its video and phone services will not be affected and that prices for promotional packages, which generally last one year, will not rise.

But all customers who have Internet service as part of their video or phone package will see their prices go up.

Canaccord Genuity analyst Tom Eagan downgraded his Cablevision rating from "buy" to "hold" on Nov. 27 and said that Cablevision will lose customers if it decides to raise prices not long after Superstorm Sandy.

"Given the massive service outages among its subscribers (after Sandy), we don't believe the company can raise rates ... without incurring material customer churn," Eagan said.

The cable provider, which is controlled by the Dolan family, said in early November that 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.

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 shares closed up 2.6 percent, at $14.16, on Thursday.