Cable Technology Feature Article
Cablevision "Down Under" as Figures Belie Analysts' Expectations
By Mini Swamy, TMCnet Contributor
Cablevision, the fifth- largest U.S. cable provider, has reasons to be concerned. It was on jittery ground as it experienced the worst slump in more than two and half years in New York trading. A sluggish economy, competition from online video rivals and a downtrend in U.S. housing didn't help matters as they only exacerbated the situation.
According to John Tinker, an analyst at Maxim Group LLC in New York, Cablevision has a strong rival in Verizon (News - Alert) Communications in about 40 percent of its coverage area. Cablevision lost 23,000 video customers, after gaining 75,900 a year earlier. Promotional offers from Verizon, coupled with a weak housing market, are factors cited as possible reasons for the loss of customers.
On the broadband front, although the subscriber base increased by 5,000 in the quarter, it was well below the figure predicted by Marci Ryvicker, analyst at Wells Fargo (News - Alert) and Co. in New York. Even the acquisition of Bresnan Communications LLC in 2010 did little to stem the decline of Internet and phone users at Cablevision.
To make matters worse than they already were, sales of new U.S. homes declined in June as job growth slowed and purchases of houses touched a three-month low. Although the U.S. economy grew during the three-month period from April to June, it hardly met analysts' expectations.
Profits from continuing operations was 24 cents, off by two cents as estimated by Richard Tullo, an analyst at Albert Fried & Co. in New York.“The cable companies aren’t aggressively going after clients because of credit concerns,” said Tullo, who has a “market perform” rating on the shares.
In an effort to right its market position, Cablevision repurchased 4.2 million Class A shares and stated that it had the capacity to buy more. According to Chief Financial Officer Gregg Seibert, Cablevision has put all acquisitions on hold.
Unlike many competitors, Cablevision doesn’t offer Time Warner (News - Alert) Inc.’s HBO Go application, which allows HBO subscribers to watch programming outside the home. Hence, plans are afoot at Cablevision to rectify this. The company stated that it had developed smartphone apps for the iPod Touch and iPhone (News - Alert), which will allow customers to watch live TV on mobile devices wherever and whenever they want.
How far these measures will help Cablevision to come back into the picture remains to be seen.
Mini Swamy is a contributing editor for TMCnet. To read more of her articles, please visit her columnist page.