Biz Briefs: SBC Reports Decline in Q3 Profit

Oct 24, 2005  •  Post A Comment

SBC Communications, the country’s No. 2 telephone company and soon to be a provider of video services, last week reported a 40 percent decline in third-quarter profit to $1.25 billion from a year-earlier $2.09 billion, when the company got a one-time boost from the sale of some of its telephone directory businesses. Revenue climbed 21 percent to $15.6 billion.

The results came as SBC reported its largest-ever surge in high-speed data customers-528,000-due to its decision earlier in the year to cut prices to $14.95 a month. Such growth is important to SBC and other phone companies, which are losing core wire-line customers to telephony offerings from cable operators such as Time Warner and Comcast. SBC reported a 5 percent drop in wire-line customers to 50.2 million.

Viacom Moves Up Split to Year’s End

Sumner Redstone’s Viacom announced last week that it expects to conduct its planned breakup sooner than initially thought, with the split expected to occur by the end of the year. The company had said it would complete the breakup in the first quarter of 2006.

The split involves creating two separate public companies, with the assets of MTV Networks and Paramount Pictures forming the new Viacom while the assets of CBS, Infinity Broadcasting and Simon & Schuster form CBS Corp.

The breakup is the brainchild of Mr. Redstone, who is looking to jump-start Viacom’s stock price. Investors have lamented that given Viacom’s combination of slow-growth assets such as CBS and Infinity and high-growth properties such as MTV Networks, it has been difficult to figure out whether Viacom is a growth stock or a value stock. By splitting up the slow-growth and high-growth assets, Mr. Redstone says, he hopes to match the right investors to the right stock. However, some critics have suggested that the decision is more rooted in Mr. Redstone’s aversion to choosing between his two lieutenants-co-Chief Operating Officers Tom Freston and Leslie Moonves-for his successor.

James Dolan Has Bypass Surgery

Cablevision Systems CEO James Dolan was expected last week to stage a full recovery after being hospitalized Oct. 15 for heart bypass surgery, which took place Oct. 17. The cable operator declined to provide further details on what led to the 50-year-old Mr. Dolan’s hospitalization.

Wall Street had little reaction to the news, in part because Mr. Dolan, despite being the company’s CEO, has more day-to-day involvement running Madison Square Garden and Cablevision’s sports teams, including the New York Knicks. The company’s core cable operation, considered the best-run and most profitable in the country by many Wall Street analysts, is managed by Cablevision President and Chief Operating Officer Tom Rutledge.

Mr. Dolan’s hospitalization comes at a time when Cablevision is seeking to remake itself. The company is in the process of taking its cable assets private, while at the same time spinning off its Rainbow Media unit to the public.