February 26, 2014 / 5:05 PM / 4 years ago

UPDATE 2-Cablevision beats Street on subscriber numbers, shares rise

By Liana B. Baker

Feb 26 (Reuters) - Cablevision Systems Corp lost fewer video subscribers than expected in the fourth quarter and said the company expects growth in cash flow in 2014, which sent shares of the cable operator higher on Wednesday.

The company, which is controlled by New York’s Dolan Family, said it lost 18,000 cable TV subscribers in the fourth quarter, which was better than the 28,900 video losses that Wall Street was expecting, according to StreetAccount.

“Cablevision is facing fewer customer losses with strong Verizon FiOS competition,” said ISI analyst Vijay Jayant.

The cable operator has the largest exposure to Verizon’s pay TV service, which has been taking customers away from cable companies in recent years.

Kristin Dolan, the president of Optimum Services at the company, said Verizon has been aggressive with its promotional pricing. Cablevision has been trying to crack down on offering discounts to customers who are only interested in promotions, a strategy the company said was working.

“We continue to hold our own with them,” Dolan said, referring to Verizon.

Cablevision’s finance chief Gregg Seibert said on a conference call that in the first quarter the company expects to report high-single digit to low-double digit percentage growth in adjusted operating cash flow, its most closely watched metric.

Cablevision did not provide a full year cash flow forecast but said it expected some cash flow growth in 2014, but not at the same rate of the first quarter.


Executives on the call declined to comment about the recent Comcast -Time Warner Cable proposed $45.2 billion merger that is set to shake up the U.S. cable industry. MoffettResearch analyst Craig Moffett said that deal probably robs Cablevision, a perennial takeover target, of one potential buyer.

To improve its case with regulators, Comcast has said it is willing to sell 3 million subscribers to keep its market share below 30 percent. Cablevision, with a base of about 3 million subscribers, now seems like an unlikely target for Comcast, Moffett said.

“Comcast isn’t going to divest subscribers in one transaction to buy them back in another,” Moffett said.

Still, Cablevision’s foothold in markets such as Long Island in New York and New Jersey would still make it attractive to the cable company that controls New York City.

Revenue rose 4.5 percent to $1.58 billion. Analysts on average were expecting $1.57 billion, according to Thomson Reuters I/B/E/S.

Net income was $51.8 million, or 19 cents per share, down from $116.54 million, or 45 cents a share. A year earlier, the company had higher net income because of discontinued operations such as Bresnan and Clearview Cinemas, two assets Cablevision has since sold.

Adjusted for discontinued operations, EPS was 18 cents per share, which beat Wall Street estimates of 9 cents per share, according to Thomson Reuters estimates.

Cablevision’s lower costs helped improve its cable margins. Its fourth-quarter cash flow margin was 32.8 percent, which was up slightly from a year ago.

Cablevision shares rose 67 cents or 4 percent to $17.29.

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