Aug. 2 (Bloomberg) -- Cablevision Systems Corp., the fifth-largest U.S. cable provider in terms of subscribers, reported second-quarter sales that missed analysts’ estimates after a surprise drop in total subscribers.
Revenue rose 0.8 percent to $1.57 billion, the Bethpage, New York-based company said today in a statement. Analysts had projected $1.58 billion on average, according to data compiled by Bloomberg.
Cablevision’s total customers fell by 11,000 to 3.22 million in the period. Analysts had projected a gain of 33,000. The company also is coping with escalating fees from cable-television programmers and a saturated market in broadband Internet, said Craig Moffett, an analyst at Moffett Research LLC in New York.
“Cablevision is between a rock and a hard place,” Moffett said. “They have successfully penetrated their markets with broadband to such a degree that incremental growth will be very hard to come by.”
Even as its growth slows, Cablevision is increasingly seen as a takeover target, said Jaison Blair, an analyst at Telsey Advisory Group in New York. The company could be acquired by Time Warner Cable Inc., the second-largest U.S. cable company, or Charter Communications Inc., the fourth-largest, Blair said.
‘Never Say Never’
Bloomberg News reported today that Cox Communications Inc. has held talks with Liberty Media Corp. about a combination with Charter, which Liberty partly owns. Merger speculation helped push up Cablevision shares today. The stock rose 4.9 percent to $19.56 at the close in New York, leaving the shares up 31 percent this year.
Cablevision will “never say never” to potential consolidation activity, Chief Executive Officer James Dolan said today on a conference call.
The company is signaling that it’s more open to getting acquired, said Richard Tullo, an analyst at Albert Fried & Co. in New York. Cablevision said that it’s focusing on customer retention -- something typical of a business that’s preparing to sell itself, he said.
“Jim Dolan let the cat out of the bag,” said Tullo, who gives the shares a buy rating. “The big reason you focus on retention is because you want to retain those subscribers for the company that acquires you.”
Cablevision serves customers in New York, New Jersey, Connecticut and parts of Pennsylvania. The company lost 20,000 video subscribers, gained about 1,000 high-speed Internet users and added 3,000 phone customers last quarter.
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