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Cablevision Growing, But Slowing

Cablevision Systems Corp. (NYSE: CVC) continues to perform well in the face of competition from Verizon Communications Inc. (NYSE: VZ)'s FiOS, but its growth rate for subscription services slowed in the first quarter, compared with the growth rate in last year's first quarter.

This trend doesn't come as a huge surprise, as the story has been the same for many of Cablevision's peers in recent quarters.

Still, Cablevision's numbers stacked up well against the expectations of Sanford C. Bernstein & Co. Inc. analyst and regular cable tracker Craig Moffett. Table 1: Cablevision: Subscriber Trends
1Q08 1Q09 1Q09 Bernstein Predictions
Revenue generating units +197,000 +84,200 N/A
Basic video subs +2,000 -6,300 -8,000
Digital video subs +41,000 +9,400 N/A
HSD subs +61,000 +29,800 +22,000
Voice subs +93,000 +51,400 +22,000
Source: Cablevision Systems Corp., Sanford C. Bernstein & Co. Inc.




On the digital video front, Cablevision doesn't have much of a pool left to pull from, since 92 percent of its customers have the service. The MSO is also preparing to halt the sale of its expanded basic analog video tier by the end of this year, making way for eventual all-digital migration. (See Cablevision Eyes All-Digital Future .)

The good news for Cablevision is that it's still getting more dough out of the subscribers it does have. Average revenue per basic video customer rose to $136.55 in the first quarter, versus $129.56 in the year-ago period.

It's also making moves to retain customers through aggressive deployments of WiFi (offered for free to all cable modem subscribers) and Docsis 3.0. (See Cablevision Debuts 101-Mbit/s Wideband Service, Cablevision Mobilizes Content Play, and Cablevision Plays WiFi Card .)

Cablevision COO Tom Rutledge reiterated this morning that the MSO doesn't expect the new 101-Mbit/s wideband service to bring in new customers in droves. "We expect that it's a fairly limited marketplace initially," and likely to be more attractive to small business customers, he said, noting that it's early to make judgements, considering full marketing of the tier won't kick in until May 11.

Profits whiff
On the financial front, Cablevision revenues rose compared with last year, on par with analyst expectations. The MSO also pulled in a profit -- which reversed a year-ago loss but still missed analyst expectations by 8 cents. (See Cablevision Posts Q1.)

Table 2: Financial Snapshot
1Q08 1Q09 Change (%)
Revenues ($B) 1.720 1.903 11%
Net Income ($B) -0.031 0.020 --
EPS ($) -0.11 0.07 --
Source: Cablevision, Thomson Reuters




Table 3: Cablevision vs. Analysts
Analysts' Consensus Estimate 1Q09 Actual 1Q09
Revenues ($B) 1.898 1.903
EPS ($) 0.15 0.07
Source: Cablevision, Thomson Reuters




Cablevision's cable unit saw revenues jump 4.8 percent, to $1.272 billion, thanks to continued, but slower, growth in most subscription service categories.

Its enterprise services division, Optimum Lightpath , is also winning share from the telcos. That unit posted first-quarter revenues of $64.2 million, up 8 percent, but a portion of those gains came by way of Cablevision's acquisition of 4Connections last fall. (See Optimum Lightpath Expands Southward.)

— Jeff Baumgartner, Site Editor, Cable Digital News




Interested in learning more on this topic? Then come to Cable Next-Gen Video Strategies: Competing in the Three-Screen World, a one-day conference that will take a comprehensive look at the cable industry's attempts to generate revenues and fend off its rivals by deploying next-generation video technologies. To be staged in Atlanta, June 25, admission is free for attendees meeting our prequalification criteria. For more information, or to register, click here.


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