Cablevision Tones Down Guidance

Cablevision Systems Corp. (NYSE: CVC) posted in-line second quarter net revenue of $1.568 billion, up 12.3 percent year over year, marking growth in its telecom, Rainbow Media, and Madison Square Garden divisions.

That, coupled with lower capital expenses and the sale of the FSN Bay Area and FSN New England regional sports nets, helped the New York-based operator swing to a profit of $317.4 million, or $1.10 a share, up from earnings of $14.6 million, or 5 cents a share, a year earlier.

The MSO said telecom services revenues, covering its Optimum-branded residential cable and commercial offerings, jumped 12.8 percent to $1.18 billion. The cable-only unit saw revenues rise 13 percent to $1.13 billion, fueled by digital video, high-speed data, and voice subscriber growth.

The MSO added 39,000 digital video subs, up 12.3 percent from a year earlier. Cablevision ended the quarter with 2.55 million digital subs, a penetration rate of 81 percent.

Cablevision also added 50,000 high-speed data customers, a year-over-year increase of 14.6 percent.

The story was better with voice, as Cablevision signed on 81,000 new subs in the quarter, extending that sub base to 412,000.

While advanced service penetration continued to rise, Cablevision's basic video base was relatively flat. The company added 38,000 basic subs, up 1.2 percent versus a year ago. Cablevision had 3.14 million basic subs by quarter's end.

Looking ahead, the company adjusted 2007 guidance, noting it will "remain in a competitive environment," likely a reference to pressure being applied by Verizon Communications Inc. (NYSE: VZ).

Cablevision now expects basic video subs to be flat, versus previous guidance of an increase of 1 percent to 2 percent. The operator also expects revenue growth to reach 11 percent versus earlier expectations in the "mid-teens." Cablevision also updated guidance on revenue generating unit (RGU) growth. It now expects to add between 825,000 and 900,000 RGUs, versus an earlier range of 850,000 to 950,000.

Cablevision is on a path toward privatization. In May, the company entered a definitive merger agreement with the Dolan Family Group. The deal still needs the green light from shareholders, and is subject to traditional regulatory approvals as well. (See Cablevision Keeps Family Ties , Stock Spike Threatens Cablevision Deal, and Dolan-ing Out the Dough.)

Company execs will discuss the quarter in more detail during Wednesday morning's earnings call with reporters and analysts.

Cablevision shares were up 59 cents, to $34.31 a piece, in early trading Wednesday.

— Jeff Baumgartner, Site Editor, Cable Digital News

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