Cablevision Cranks Up the Capex

Cablevision Systems Corp. (NYSE: CVC)'s capital spending spiked in the first quarter, a trend the MSO sees continuing through the third quarter as it plows cash into new products and expands the reach of its Wi-Fi network and network DVR service.

Cablevision's capex in the period reached $216.09 million, well up from $131.01 million in the year-ago period. The MSO isn't providing any specific guidance, but expects capex to be "significantly higher" versus 2011 "at least through the third quarter of this year," EVP and CFO Gregg Seibert said on Thursday's earnings call. Cablevision's capex through the third quarter of 2011 reached $574.47 million, so expect something well north of that. (See Cablevision's Lower Prices Pay Off.)

"As you look at 2012, anticipate that our capital expenditures are going up, and we're making the investments we need to make in our business," Cablevision President and CEO Jim Dolan said.

He offered a broad outline of where the MSO spent its higher levels of capex in the first quarter and where it will be applied in the next couple of quarters. Among the bigger hits will be a "substantial expansion of our Wi-Fi network," Dolan said, noting that the current deployment has more than 1.3 million devices registered for automatic sign-ons.

Cablevision will also spend more cash so it can complete its all-digital upgrade this year, a move that will mean more set-top equipment purchases but will also get the MSO's network DVR deployed across its footprint. It's also spending on TV Everywhere apps for tablets and other mobile devices and looking to expand its video-on-demand (VoD) library. (See Cablevision's Network DVR Debuts in the Bronx .)

The MSO is also investing in a new, "highly graphical" cloud-based navigation system for set-top boxes that is currently in tests with employees. In addition to storing more data (30 days of viewing data), it will also start to move Cablevision away from its more limited grid-based guides and give it a new weapon to wield against Verizon Communications Inc. (NYSE: VZ)'s FiOS TV.

Other MSOs are pursuing similar guide upgrades. Comcast Corp. (Nasdaq: CMCSA, CMCSK), for example, expects to introduce its new cloud-based "X1" product in one "major" market (possibly Boston) in the next few weeks. (See Comcast's X1 to Fly First in Boston? )

— Jeff Baumgartner, Site Editor, Light Reading Cable

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