CORRECT: Cablevision 4Q Net Falls 47% On Discontinued Operations

Date : 02/28/2012 @ 1:58PM
Source : Dow Jones News
Stock : Cablevision Systems Corp. Class A (CVC)
Quote : 34.87  0.0 (0.00%) @ 2:05AM

CORRECT: Cablevision 4Q Net Falls 47% On Discontinued Operations

Cablevision System (NYSE:CVC)
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Cablevision Systems Corp.'s (CVC) fourth-quarter profit dropped 47% in the absence of its former cable networks division and other assets, but the company was able to hold on to more customers than expected.

The Bethpage, N.Y.-based company lost 14,000 video customers from the third quarter, while adding 20,000 high-speed data customers and 31,000 voice subscribers. Total customer count in its telecommunications business totaled 3.61 million at the end of the year, down 11,000 from the end of the third quarter.

Cablevision faces intense competition in its hometown New York market, where new rival Verizon Communications Inc. (VZ) is aggressively marketing its bundled FiOS service. Like other cable operators, Cablevision is also relying more on Internet subscribers to drive revenue as more consumers "cut the cord" and turn to Web-based services to watch television.

Concerns about Cablevision's operating business and leadership have mounted in recent months, following the unexpected departure of its well-respected Chief Operating Officer Tom Rutledge late last year.

During a conference call with analysts, Chief Financial Officer Gregg Seibert said he and Chief Executive James Dolan would assume Rutledge's former duties "for the foreseeable future," but they wouldn't comment on why Rutledge left.

For the fourth quarter, Cablevision reported a profit of $60.6 million, or 22 cents a share, compared with a year-earlier profit of $113.9 million, or 38 cents a share. Revenue increased 7.3% to $1.69 billion, or roughly 1% to $1.57 billion excluding revenue from its acquisition of cable operator Bresnan Communications and other impacts.

Wall Street analysts were looking for a per-share profit of 23 cents on $1.68 billion in revenue, according to a survey conducted by Thomson Reuters. The missed results were due in part to $89.7 million in fourth-quarter financing costs to extend Cablevision's debt maturity.

Cablevision continued to restructure its business mix last year, spinning off AMC Networks Inc. and acquiring Bresnan Communications Inc. in a deal aimed at broadening its subscriber footprint.

Cablevision shares traded 5.2% lower at $14.82; the shares are down 42.6% over the last 12 months.

Analysts praised the fourth-quarter revenue and subscriber growth, but they continued to worry that Cablevision faces limited room to boost earnings and offset higher programming costs.

"It's hard not to think of Cablevision's steady 4Q result as akin to a rabbit-out-of-a-hat trick; impressive, but difficult to replicate," wrote Bernstein Research analyst Craig Moffett.

Cablevision said content programming costs are expected to increase in the mid-to-high single-digit percentage range, which is generally in line with the increases expected by other distributors.

Increases in programming costs represent a continuous pressure on cable distributors' profit margins. Higher costs are often grudgingly accepted by distributors who don't want to lose access to must-have programming like Walt Disney Co.'s (DIS) ESPN sports coverage.

-By William Launder and Mia Lamar, Dow Jones Newswires; 212-416-3412; william.launder@dowjones.com

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