Cablevision Fourth-Quarter Financials Hit by Superstorm Sandy
UPDATED: CEO James Dolan also discusses a network carriage lawsuit against Viacom as the cable firm's stock falls more than 10 percent.
Cablevision Systems on Thursday reported weaker fourth-quarter financials and subscriber declines in the wake of Hurricane Sandy.
The news dragged the stock down more than 10 percent to $13.82 as of noon ET.
Management of the cable operator, which is controlled by the Dolan family, on an earnings call also discussed its antitrust lawsuit against Viacom. It had filed the suit Wednesday, arguing that the entertainment giant used the strength of its big-name channels like MTV to force it to carry and pay for smaller cable networks.
"Viacom's practice of forcing distributors to carry more than a dozen lesser-watched networks in order to carry its must-have networks is an abuse of its market power and a violation of federal antitrust laws," CEO James Dolan said on a conference call. He argued that it "impairs programming competition" and boosts cable bills. "And we believe it needs to be stopped," added.
Asked if bundling of networks hasn't been an established practice, Dolan said retail bundling was designed to provide added value to customers. "That is not what this lawsuit is about," he said. "It is about wholesalers forcing in product" and crowding shelf space and driving up prices for pay TV subscribers. Dolan declined to answer why his company was opposing wholesale bundling now, saying he wouldn't want to try the case on the earnings call.
Cablevision posted a quarterly profit of $116.6 million, including a $200 million gain for the settlement of the company's litigation with Dish Network. Excluding that and discontinued operations, the bottom-line figure fell to a loss of $83.7 million. That compared to a year-ago profit of $60.5 million. Operating profit fell from $346.2 million to $29.3 million. Revenue decreased 1.6 percent to $1.66 billion.
The company lost 50,000 video subscribers in the final quarter of 2012 to end the year with 3.6 million, as well as 5,000 broadband customers and 10,000 telephony users. Cablevision said that Hurricane Sandy accounted for 10,000 video, 9,000 broadband and 7,000 telephony subscriber losses.
Said Dolan: "2012 was a year of investment at Cablevision - investment in our network, in our products and services, and in our employees to ensure that we were providing our customers with the very best experience with their television, internet and phone services. The enormous challenges of Superstorm Sandy had a strong negative impact on our fourth-quarter results. Ever resilient, our employees met those challenges, restored our system and now are focused on continuing to enhance our product portfolio to meet our customers’ evolving needs and expectations."
Dolan also said on the call that a "soft economy" and tough competition also continue to be key challenges.