While shunning the traditional quarterly conference call, and citing its pending acquisition by Altice as a reason, Cablevision reported lackluster earnings after market close on Tuesday. Revenue was down 0.8% year over year to $1.61 billion, missing analyst expectations which were pegged at $1.64 billion.
Remarkably, the cable operator still claimed its best third quarter since 2012 in terms of subscriber totals. It lost 10,000 customers overall, but that compares to a loss of 36,000 a year ago. Video subscribers were down by 33,000, and voice customers by 20,000, but that stands against decreases of 53,000 and 33,000 respectively during the third quarter of 2014. Cablevision Systems Corp. (NYSE: CVC) also added 3,000 broadband subscribers this year, helping to offset some of the company's revenue losses.
The decline in revenue stemmed primarily from the shedding of video and voice subscribers, but lower advertising sales also played a role, as did the $12.8 million Cablevision set aside for the "probable settlement of a class action legal matter." The company did not state which class action suit it was referring to, but customers were notified earlier this year that a class action suit is pending over a blackout of Fox TV channels in 2010. More recently, another class action lawsuit was filed against Cablevision regarding the company's use of customers' residential routers to create a shared WiFi hotspot network.
On the video front, new subscriber losses for Cablevision come at the same time the operator has amped up efforts to appeal to cord-cutters who may only want broadband access. The cable company has started reselling OTT services like Hulu and CBS All Access to its Optimum Online subscribers, and has even combined Internet service in a bundled offer with an over-the-air TV antenna. (See Cablevision Plays Up OTT in CBS Retrans Deal.)
It's worth noting that analysts were originally skeptical that Cablevision could be an acquisition target given the competition it faces in the greater New York metropolitan market. Supporting that idea is the fact that rival Verizon Communications Inc. (NYSE: VZ) continues to gain FiOS broadband and video subscribers, albeit at a slower rate than in previous quarters. (See Skinny Bundles Sock FiOS Video Revenues.)
However, the threat of competition wasn't enough to stop Altice 's bid of $17.7 billion to buy out Cablevision in September. The companies believe that deal will close in the first half of 2016. (See Altice Confirms $17.7B Bid for Cablevision.)
In another bright spot for Cablevision, progress was positive in the third quarter for both commercial services and WiFi deployments. Net revenues from commercial services, sold under the brand name of Lightpath, were up 3.8% to $91.2 million, most of which is attributable to Ethernet sales. Cablevision's WiFi hotspot count now tops 1.4 million. That's still far below Comcast Corp. (Nasdaq: CMCSA, CMCSK), which boasts more than 11 million hotspots, but keeps Cablevision solidly in second place in the cable WiFi race.
— Mari Silbey, Senior Editor, Cable/Video, Light Reading