Cablevision Fourth-Quarter Profit, Video Subs Drop
UPDATED: The cable operator reported higher revenue in the latest period as it grew broadband and telephony customers, but its stock drops as an analyst cites concern about rising programming costs.
NEW YORK - Cablevision Systems on Tuesday reported lower fourth-quarter earnings as it lost video subscribers and had a loss on a debt extinguishment.
The cable operator, controlled by the Dolan family, posted a quarterly profit of $60.6 million, compared with $113.9 million in the year-ago period. The company also cited $3.7 million in executive separation costs from the fourth-quarter departures of some key executives, including former COO Tom Rutledge. The loss on extinguishment of debt was for costs related to financing transactions that successfully extended the company's debt maturities.
Revenue rose 7.3 percent to $1.69 billion, exceeding Wall Street estimates. The company lost 14,000 video customers in the latest period to end it with 3.25 million. But it added 20,000 broadband and 31,000 telephony customers.
"For the fourth quarter, despite modest video subscriber losses, our cable operations continued to report improved subscriber metrics in both high-speed data and voice customers," said president and CEO James Dolan who has been running the cable business day-to-day since Rutledge's departure. "We remain confident in the strength of our underlying business and in our ability to deliver industry-leading products. Looking ahead, we will continue to improve on those offerings while we remain focused on enhancing shareholder returns and building the company for the long term."
On a conference call, management said Dolan will continue to run the company's day-to-day operations for the foreseeable future. Cablevision is expecting program costs to rise in the mid to high single digit percentage range, but won't increase its prices in 2012 as it concentrates on retaining and bringing in customers, they said.
Cablevision's stock was down 4.7 percent at $14.90 as of 11:30am ET. "We believe the stock is off given the commentary around no price increases combined with rising programming costs," said Wells Fargo analyst Marci Ryvicker. "There seems to be a question as to whether Cablevision can maintain flat adjusted operating cash flow growth in 2012."