Cablevision 1Q income soars on subscriber growth, advertising pickup; company boosts dividend

By Deborah Yao, AP
Thursday, May 6, 2010

Cablevision’s 1Q net income soars; boosts dividend

PHILADELPHIA — Cablevision Systems Corp. said net income for the first quarter more than tripled as the New York-area cable TV company added more customers. The company also boosted its dividend by 25 percent.

But its stock tumbled as the earnings reported Thursday fell far below analysts’ forecasts. Shares of cable TV companies also were under pressure following a proposal Thursday by the Federal Communications Commission’s chairman to regulate Internet service, cable’s most promising product, more like a utility.

Cablevision shares fell by $2.69, or 10 percent, to $24.12 in afternoon trading Thursday.

Chief Operating Officer Tom Rutledge told analysts that competition and existing rules have been enough to prompt Cablevision to offer innovative services such as faster Internet speeds. He said more regulation would be disappointing.

Cable TV companies have been losing television customers to satellite TV and phone companies that offer video, although competition from the latter seems to be waning. Cable providers also face long-term weakness in their landline phone services as people migrate to cell phones.

But their high-speed Internet offerings show the most promise as people watch more video online. For the most part, phone companies haven’t been able to match the speeds offered by cable. Nor have satellite TV providers, which typically partner with phone companies to offer Internet service.

Cable TV and phone companies say they would be less likely to invest in their networks if they’re hampered by more regulation. They warned that rules to ensure that all data are treated equally on the Internet — so-called “net neutrality” — could prevent them from offering premium services to justify costly investments in their networks.

Sanford Bernstein analyst Craig Moffett said in a research note that the FCC action would “no doubt, overshadow Cablevision’s operating results. Pity, because once again, Cablevision’s results are outstanding.”

Cablevision, the nation’s fifth-largest cable TV operator, earned $74.2 million, or 24 cents per share, in the first three months of the year. That’s up from $21.2 million, or 7 cents per share, a year earlier.

Analysts surveyed by Thomson Reuters were looking for a bigger net income of 33 cents per share.

Revenue climbed 5 percent to $1.75 billion, slightly higher than the average estimate of $1.73 billion. A highlight was a 35 percent lift in cable advertising revenue. Revenue in the same period last year was $1.67 billion.

The company also declared a quarterly dividend of 12.5 cents per share, up from 10 cents per share.

Cablevision added a net 900 basic cable TV customers during the quarter, an improvement over the 6,300 it lost a year ago.

Among basic video customers, 12,000 signed up for new digital cable service during the first quarter this year, up from 9,400 a year ago. Cablevision also added 42,600 high-speed Internet subscribers, better than the 29,800 gained a year ago. But the 42,300 phone subscribers added in the recent quarter was lower than the 51,400 a year ago.

Cable TV, Internet and phone revenue climbed nearly 6 percent to $1.4 billion.

Revenue from the company’s programming segment, which comprises AMC, WE tv, IFC and Sundance channels, grew 6 percent to $265 million. The channels brought in higher revenue from the fees they charge other cable TV providers as well as from advertising sales.

Meanwhile, the ad recovery has yet to lift Newsday, reflecting the continuing struggle in the publishing industry. The newspaper narrowed its operating loss to $4.7 million, from $7.2 million in the same period a year ago. But revenue fell more than 10 percent to $74.7 million.

Cablevision, which is based in Bethpage, N.Y., spun off its Madison Square Garden operations in February.

AP Business Writer Andrew Vanacore contributed to this story.

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