Cablevision Posts Profit
Cablevision Systems Corp., the nation’s fifth-largest cable TV operator, posted a profit for the fourth quarter as more customers signed up for digital cable TV, phone and Internet services.
The only money-losing division was its Newsday newspaper, which has been a poor investment for Cablevision. Otherwise the company has been performing well against stiff competition from satellite TV and phone companies that offer video.
As a sign of where advertising dollars are heading, Cablevision said its cable TV channels grew ad revenue 13 percent while Newsday’s fell 20 percent. In addition to serving 3.3 million cable, Internet and phone customers in the New York metro area, Cablevision owns such national cable channels as AMC and IFC.
In the last three months of 2009, Cablevision earned $78.4 million, or 26 cents per share. In the same quarter a year earlier it lost $323.2 million, or $1.11 per share, when it booked a $400 million charge to account for the declining value of Newsday. Cablevision bought Newsday in July 2008 for $650 million.
Revenue in the most recent quarter rose 5 percent to $2.14 billion.
Cablevision’s earnings fell below the 36 cents per share expected by analysts, but its revenue rose above their $2.1 billion forecast, according to Thomson Reuters.
Shares of Cablevision, based in Bethpage, N.Y., rose 81 cents, 3.5 percent, to $23.64 in morning trading.
Cablevision isn’t immune to competition for video subscribers, especially in a tough economy inspiring customers to look for cheaper options. The top two cable TV providers — Comcast Corp. and Time Warner Cable Inc. — reported a similar trend for the fourth quarter.
”Our biggest difficulty has been in lower-income areas with high unemployment, and I think if we were in a more robust economic climate, we would have had growth in the fourth quarter video (subscribers),” said Tom Rutledge, Cablevision’s chief operating officer, in a conference call with analysts.
Cablevision lost 45,100 video customers from the prior year, ending the quarter with 3.1 million. However, more of the remaining subscribers upgraded to digital service, which is more expensive. Cablevision added 55,900 digital video subscribers in the period.
Because of that and growth in bundled packages of TV, phone and Internet service, Cablevision customers saw an average monthly bill of $144.03 in the fourth quarter, up 6.8 percent. The combined TV, Internet and phone business increased revenue 5.5 percent to $1.38 billion, while operating income soared 22.7 percent to $364.6 million.
The Madison Square Garden group, which includes the New York Knicks and Rangers and was spun off as a separate company this month in part because of its uneven performance, grew its revenue 3.6 percent to $412 million. The increase mainly came from higher programming fees it received from other subscription TV operators for the right to carry its regional sports channels. Operating income rose to $44.3 million from $5.6 million.
Newsday’s revenue fell 15.7 percent to $90.3 million, reflecting the advertising slump besetting the newspaper industry. Newsday started charging nonsubscribers and non-Cablevision customers for access to the newspaper’s Web site, but the plan’s success is unclear. Newsday’s operating loss narrowed to $2 million from $407.6 million.
Cablevision said it’s testing a mobile phone that could carry calls on either Wi-Fi or a cell phone network. It could be a product to offer to customers who are considering disconnecting their landline phones to go wireless — a problem for traditional phone companies and a future headache for cable’s own phone services.
Cablevision is building Wi-Fi hot spots all over its coverage area, even in train cars. For broader access to a cell phone network, Rutledge said the company hasn’t decided whether it would put up its own cell phone towers — a path privately held cable provider Cox Communications Inc. is taking — or lease capacity from other companies.