Cablevision Exploring Sale of Optimum West, Working to Restore Sandy Outages
CEO James Dolan confirms the company is entertaining offers for former Bresnan Communications and addresses the "significant" financial impact of Hurricane Sandy.
On an earnings call with analysts, Cablevision CEO James Dolan confirmed that the company is exploring a sale for Optimum West, its cable service that serves some 360,000 customers in the Western U.S. states of Colorado, Montana, Wyoming and Utah.
Optimum West is a service built from the former Bresnan Communications, which Cablevision purchased for $1.4 billion in 2010.
At the time of the purchase, the acquisition signaled expanding horizons for Cablevision, which has much of its operations based in the Northeast. The acquisition of Bresnan was largely credited to ex-COO Tom Rutledge, who became CEO of Charter Communications in 2011. After Rutledge's departure, talk initiated that Cablevision might divest of its western cable service, including a report in the Wall Street Journal last month. At the time, Cablevision said it wouldn't comment upon rumors and speculation.
On Tuesday, Dolan said that Cablevision has been approached about Optimum West, and he said that "while it has not been the intention, we have decided to explore a transaction."
Cablevision CFO Gregg Seibert added that business for Optimum West has been "gangbusters" but that the company couldn't ignore unsolicited offers. "There is no assurance that we will conclude a sale," he cautioned.
Expected suitors include Charter, Time Warner Cable and Suddenlink Communications.
Asked by one analyst if Cablevision would also explore a sale of its core Optimum East business, the company's top executives laughed. "You can never say you would never listen; at this time, we are focused on what we are doing," said Dolan.
On the conference call, Cablevision also addressed the impact of Hurricane Sandy on its financials.
The cable giant wouldn't give any firm estimate of the financial impact, but Seibert admitted that it would be "significant."
As of 2 pm on Monday, more than 658,000 of Cablevision's customers were still without service. However, Cablevision has started to break out the number of Optimum customers still without power in an effort to stress that it can't do anything for those customers. Only about 17,000 of its customers have power but are without cable service.
"We are on the heels of the power companies," said Dolan. "As they light up the grid, we can go in and repair the lines."
Dolan also praised the company's service crews as "performing to the best level ever," and while the company executives stayed away from predicting exactly how it would effect churn rate ("You never can say what customer base is going to do"), Cablevision did say that customers could get rebates for lost service, but those rebates would only come for customers who gave a call.
Dolan stressed, "Restoring service to customers is a near singular focus right now."
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