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Cablevision to Increase Capex in 2012

Jeff Baumgartner
2/28/2012
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Cablevision Systems Corp. (NYSE: CVC) expects to goose capital expenditures as it looks to "accelerate" some 2013 projects into this year's budget, CEO Jim Dolan said Tuesday on the company's fourth-quarter earnings call.

Dolan didn't say how much of a capex boost to expect. Cablevision's total capex was $814.8 million in 2011, with the bulk covering scalable infrastructure ($217.06 million) and consumer premises equipment ($203.10 million).

The increased spending would focus on enhancements for video and Cablevision's other core products, Dolan said. As examples, he cited the faster deployment pace for Cablevision's network DVR and the launch, possibly by the third quarter, of a cloud-based interactive program guide for set-top boxes. Cablevision also plans to roll out a next-day installation program for new customers by the end of the first quarter. (See Cablevision Launches iPad App With 280+ Channels , Cablevision, TWC Expand Live TV Streaming Plans and Cablevision Plugs Its Network DVR.)

But the spending plan spooked some investors. Cablevision shares were down $1.60 (10 percent) to $14.04 in early afternoon trading Tuesday.

Q4 update
Cablevision lost 14,000 video customers in the quarter, slightly better than the 18,000 subscribers analysts were expecting the MSO to shed as it continues to grapple with Verizon Communications Inc. (NYSE: VZ) FiOS. It added 20,000 high-speed Internet customers and 31,000 voice customers in the quarter, which also beat Wall Street expectations.

Those numbers were aided by systems Cablevision acquired from Bresnan Communications. Those rural Midwestern cable properties, now called Optimum West, added 7,000 broadband subs, 8,000 voice customers, and 600 basic video subscribers. (See Cablevision Goes Country With Bresnan Buy.)

Cablevision posted net income of $60.5 million (22 cents per share) on revenues of $1.69 billion, up 7.6 percent. Non-GAAP net income, also 22 cents per share, missed Wall Street estimates by a penny, according to Thomson Reuters .

— Jeff Baumgartner, Site Editor, Light Reading Cable

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Jeff Baumgartner
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Jeff Baumgartner,
User Rank: Light Sabre
12/5/2012 | 5:41:09 PM
re: Cablevision to Increase Capex in 2012


You note: "Wall Street rarely has been a big fan of cable anyway."


Perhaps another big reason why Cablevision has tried to go private several times... makes it tough on an operator when they have to spend to stay competitive but still have to worry about Wall Street dictating their spending strategy and scrutinizing them every quarter. Makes it more diffficult to put together a long-term plan that means something, as you say. But even the private route isn't without consequences or fiscal  responsibilities. Cox, which had to reset what was a pretty ambitious and expensive wireless strategy, is in the midst of a sizable reorg. JB


 

craigleddy
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craigleddy,
User Rank: Blogger
12/5/2012 | 5:41:09 PM
re: Cablevision to Increase Capex in 2012


Yes, cable companies have found that being publicly traded is a double-edged sword, and dealing with Wall Street can be a pain in the arse, plus there's the time-consuming expense of Sarbanes-Oxley and other requirements.


In addition to Cox's return to private ownership, Advanced Newhouse (Bright House Networks) spun itself out of Time Warner and went private, Insight Communications went largely private (now being acquired by TWC), and CVC has made a couple of attempts.


But as you say, being private doesn't guarantee success. There's always a master to pay!     

craigleddy
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craigleddy,
User Rank: Blogger
12/5/2012 | 5:41:09 PM
re: Cablevision to Increase Capex in 2012


Recently MSOs have been crowing about curtailing their capex spending, which sounds good to Wall Street. But long term, cutting capex doesn't make sense for MSOs that are looking to replace their legacy equipment, upgrade services, and migrate to all-IP service delivery. The challenge is to sell this long-term vision to Wall Street and get investors out of the mentality of looking for quarter-by-quarter results. Wall Street rarely has been a big fan of cable anyway.    

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