Analyst: Hurricane Could Cost Cablevision $40 Million
Hurricane Sandy could cost New York cable operator Cablevision Systems between $25 million to $40 million, according to a Wednesday analyst report by Thomas Eagan at Canaccord Genuity.
As the financial markets reopened after two consecutive days off thanks to the devastating storm, he was one of the first analysts attempting to survey the financial damage for a company in the entertainment and media sector. Many cable and telecom firms experienced power outages and damaged equipment, and Cablevision, which has most of its customer base in New York, New Jersey, Pennsylvania and Connecticut, could be one of the firms that is hit hardest.
On Tuesday, Cablevision reported that it was experiencing widespread service interruptions and that its crews were in the field attempting to restore its Optimum TV, phone and Internet service. The company has about 3 million customers in the tri-state area.
Eagan noted that Hurricane Irene in 2011 cost Cablevision around $20 million. Hurricane Sandy has caused more damage, so the analyst moved his expectations for the company's loss above that for Irene.
He said that assuming the $25 million-$40 million loss figure is correct, it would mean that adjusted operating cash flow for Cablevision would decline 17 percent-19 percent in the current fourth quarter. The analyst, who recently upgraded Cablevision's stock, said he was already expecting declines in the second half with a shift towards adjusted operating cash growth next year.
"Of course, much of the Street will look beyond the hurricane impact to the results," Eagan wrote.
As for the expected rebound in 2013, he added: "The risk to this thesis is that Hurricane Sandy will delay a rate increase until later in 2013 than we had expected."
Cablevision's stock price was down three percent to just over $17 in early trading.
A Cablevision spokesman declined comment.