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Cablevision Says to Watch for Wideband

Jeff Baumgartner
2/26/2009

Cablevision Systems Corp. (NYSE: CVC) has wired up the bulk of its networks for Docsis 3.0 and expects to announce a wideband tier for residential and business customers shortly, according to COO Tom Rutledge.

Rutledge, speaking on an earnings conference call Thursday, did not give a precise launch date. Cablevision's fastest Docsis tier is a shared downstream of service 30 Mbit/s, slower than Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s 50 Mbit/s wideband service and Charter Communications Inc. 's St. Louis service, which hits 60 Mbit/s. (See Comcast Widens Wideband Footprint and Charter Takes On U-verse .) Canada's Shaw Communications Inc. is the only North American MSO to kick off Docsis 3.0 with a 100 Mbit/s service. (See Shaw Picks Moto for Wideband and Shaw Breaks 100-Meg Barrier.)

Cablevision will certainly unleash wideband to help it fend off Verizon Communications Inc. (NYSE: VZ), whose FiOS service passes about 1.5 million homes in Cablevision's footprint. But Rutledge said believes that most early adopters of Docsis 3.0 will be small business customers.

Wideband should help Cablevision manage its broadband network and keep churn in check, but Cablevision doesn't expect Docsis 3.0 services to be a big moneymaker early on.

"It's not a transformative factor in our business," Rutledge said, responding to an analyst question about the economic impact wideband will have this year.

Cablevision is spending $300 million over two years to deploy Docsis 3.0 and WiFi. Cablevision, which is offering the WiFi component for no extra charge to its cable modem customers, is in the process of expanding access to the MSO's New Jersey footprint. (See Cablevision Doubles Up on WiFi and Cablevision Plays WiFi Card .)

Financial update
Cablevision posted consolidated net revenues of $2.05 billion, up 11.4 percent year-over-year, but recorded an operating loss of $136.5 million, reflecting impairment charges of $402.4 million at Newsday and $41 million from VOOM, a hi-def service that Cablevision scuttled in January. (See Cablevision Posts Q4 Loss, Cablevision to Buy Newsday, VOOM Death to Cost Cablevision , and Cablevision Replaces Voom Nets.)

Free cash flow was a strong point. Cablevision generated more than $500 million in this category during 2008, versus $158 million in 2007.

Subscriber growth was largely in line with analyst expectations, demonstrating again that Cablevision has been able to keep competitors at bay. The effect of FiOS "is all but invisible," Sanford C. Bernstein & Co. Inc. analyst Craig Moffett said in a research note distributed this morning.

But, like other MSOs, growth is slowing down. (See Comcast Sub Growth Weakens in Q4 and Time Warner Cable Subs Growth Slows in Q4 .)

Cablevision added 28,200 broadband customers in the fourth quarter, versus 62,000 a year ago, and 53,400 Optimum Voice subs, compared to 102,000.

Cablevision lost 3,500 basic video subs. However, this was well below Bernstein's expected loss of 19,000 basics, and Cablevision's overall video revenue still rose 5.8 percent year-over-year.

Overall, Cablevision added 100,500 revenue generating units (RGUs) in the fourth quarter, and 653,400 RGUs for the full year.

— Jeff Baumgartner, Site Editor, Cable Digital News

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