Cablevision Profit Tops Estimates as Internet Customers Rise
Cablevision Systems Corp. (CVC), the New York-area cable TV operator, reported second-quarter profit that topped analysts’ estimates as it added more phone and broadband subscribers.
Net income fell to $63.5 million, or 24 cents a share, from $87.8 million, or 32 cents, a year earlier, when spun-off AMC Networks Inc. (AMCX) contributed to earnings, the company said today in a statement. Analysts had estimated 19 cents on average, according to data compiled by Bloomberg.
Cablevision is spending more money on its infrastructure and New York-area plants to increase customer’s broadband speeds and expand Wi-Fi access. Capital expenditures rose 38 percent to $296.4 million last quarter. The increases in spending could continue throughout the second half of this year and in the first half of 2013, Chief Executive Officer James Dolan said during a conference call.
“The company is very much in investment mode,” Marci Ryvicker, an analyst at Wells Fargo & Co. in New York, said in a note to clients. “Management’s focus on operational improvement is becoming much clearer to the investment community.”
Cablevision shares were unchanged today in New York trading, closing at $15.83. The stock has risen 11 percent this year.
Cablevision has been working on about 18 different initiatives, Dolan said, without providing specifics on what all of them are. Some include building out Wi-Fi access, including for use on trains, rolling out a new video interface to all customers later this year, and upgrading broadband speeds.
The Federal Communications Commission reported last month that Cablevision is delivering higher Internet speeds than its own advertisements, a reversal from a year ago when Cablevision’s actual speeds were just 55 percent of advertised speeds, according to Jason Bazinet, a New York-based analyst at Citigroup Inc.
Dolan said he aims to complete most of the projects this year, though the timing isn’t certain.
“We’re committed to finishing the initiatives because we think that overall they’re very good for the health of the company and customer satisfaction,” he said.
Sales were $1.7 billion last quarter, in line with analysts’ estimates. Average revenue per user rose 1.7 percent to $155.12.
AMC contributed $18.6 million, or 6 cents per share, to earnings last year. Excluding AMC, Cablevision’s profit fell 8.3 percent in the second quarter.
Recent cable acquisitions, including Cogeco Cable Inc. (CCA)’s $1.36 billion deal for Atlantic Broadband Inc. and Suddenlink Communications’ $6.6 buyout by BC Partners, CPP Investment Board and CEO Jerry Kent, have suggested that market valuations for public cable companies such as Cablevision are too low, according to Jason Armstrong, an analyst at Goldman Sachs & Co. in New York.
Cablevision, which has about 3.3 million video subscribers, added 25,000 Internet customers and 23,000 voice subscribers in the quarter. The cable provider’s TV customers were unchanged, a better performance than the 10,000 loss estimated by 12 analysts surveyed by Bloomberg.
Verizon, meanwhile, announced on July 19 it was lowering its forecast for FiOS net additions and said it would raise prices in the second half of the year. Verizon FiOS overlaps with Cablevision in about 40 percent of its footprint.
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