Less red at Cablevision, Charter

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Cable operators Cablevision Systems and Charter Communications reported narrower first-quarter losses Thursday as bundled services continue to be a boon for the sector.

In Cablevision's earnings conference call, president and CEO James Dolan declined comment on his family's agreement with the company to take it private in a sweetened $10.6 billion deal beyond saying the Dolans were "very pleased" (HR 5/3). Executives wouldn't say when shareholders will get a chance to vote on the proposed transaction.

Dolan did, however, shoot down recent speculation that his family could be looking at buying the New York Yankees baseball team. "We have no plans for the Yankees," he told analysts and investors.

Bethpage, N.Y.-based Cablevision reported a first-quarter loss of $26.3 million, down from a year-ago loss of $58 million. Revenue rose 12.5% to $1.6 billion.

In the company's core cable unit, revenue rose 14.9% year-over-year in the latest quarter as Cablevision continued to sign up customers.

The firm added 12,000 basic-cable subscribers in the first quarter, marking its 12th consecutive quarter of gains. It also signed up 65,000 net digital cable users, 78,000 high-speed cable customers and 109,000 telephony subscribers. Advertising revenue increased 26% for the quarter.

Asked about broadcasters that are increasingly looking to get paid retransmission consent fees from cable operators, Cablevision COO Tom Rutledge said Thursday that his firm feels "very comfortable with our bargaining position."

However, he also signaled that the rollout of FiOS TV, the video service provided by telecom giant Verizon Communications, has had somewhat of a negative impact on Cablevision's subscriber growth.

Analysts also argued that Cablevision's slowed customer gains are because of its industry-leading position in rolling out advanced services.

Tabak Miller + Co. analyst David Joyce on Thursday placed "roughly a 70% chance" on the Dolans' proposed privatization going through, adding though that "there is some degree of activism that would like to negotiate more value."

Pali Research analyst Richard Greenfield on Thursday urged shareholders to vote against the buyout at the $36.26 per share offered by the Dolans. "We believe they will be able to pay at least $50 to take Cablevision private one year from today," he said in a report.

Shares of Cablevision rose fractionally Thursday to a 52-week high of $36.19.Charter shares, meanwhile, advanced 3.7% on Thursday to $3.39, short of its high but more than triple its 52-week low of $1.01.

Charter posted another hefty loss in the first quarter, though narrower than the year-ago quarter at $381 million compared with $459 million.

The company grew its overall revenue 8% to $1.4 billion, with a 21% rise in revenue to $296 million generated from its high-speed Internet services and an impressive 215% increase in telephone revenue to $63 million. Video rose 1% to $838 million and, among its six revenue generators, only advertising sales fell, to the tune of 7.4% to $63 million.

Charter added 126,800 telephone subscribers, 123,900 high-speed Internet subs, 65,000 digital video subs and 16,500 basic video subs.

Average revenue per user rose 12.3%.

"The company was able to grow both customers and cash flow significantly," said Oppenheimer analyst Thomas Eagan, who rates shares "neutral." "Previously, the company has had to sacrifice one for the other."

Georg Szalai reported from New York; Paul Bond reported from Los Angeles.
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