Cablevision Systems, the New York-area cable company, said today that it turned a third-quarter profit as it increased revenue per subscriber by boosting the number of digital video, high-speed Internet and telephone subscribers. Shares fell today as the company lost subscribers and earnings lagged analyst estimates.
Net income for Cablevision, whose 3.1 million cable subscribers make it the fifth-largest U.S. cable company, was $27.1 million, or 9 cents a share, compared to a loss of $79.3 million, or 27 cents, in the year-earlier quarter. Revenue increased 15% to $1.74 billion. Sales from its cable television operations gained 9.9% from a year earlier to $1.25 billion.
Cablevision boosted its average revenue per cable customer 10% from a year earlier to $133 a month by upgrading subscribers to digital cable and adding phone and Internet subscribers. The company’s phone ervice revenue jumped 27% while its high-speed Internet sales rose 8.7%. Profit at the company’s Rainbow unit, which includes cable channels AMC and IFC, also rose as its increased advertising revenue defied the slump affecting most of the larger broadcasters while its channels boosted subscribers and affiliate sales.
“Cablevision continues to post the hands-down best numbers in the telcom/cable/satellite universe,” wrote Sanford C. Bernstein analyst Craig Moffett in a note to clients today. “If there’s a recession going on in the New York area, then Cablevision hasn’t gotten the memo yet.”
Still, Cablevision lost 13,000 customers during the third quarter, compared to a gain of 11,000 customers during the second quarter, reflecting seasonal cancellations caused by people shutting their second homes in New York’s Hamptons and the Jersey Shore. Also, its profit, pulled down by a $15.7 million operating loss at its Madison Square Garden unit, lagged the 14 cents per share average profit estimate in a Thomson Financial survey, causing the stock to fall about 10% today as of about 1 p.m. EST.
Cablevision’s results were consistent with larger cable competitors Comcast and Time Warner Cable, both of which said they lost third-quarter cable customers but boosted earnings by getting more customers to buy telephone and Internet services.
Comcast, the largest U.S. cable company with 24.4 million subscribers, said earlier this week that earnings jumped 38% despite losing 147,000 cable subscribers. No. 2 cable company Time Warner Cable, which lost 31,000 third-quarter cable subscribers, also said earnings rose after it got more subscribers to bundle video, phone and Internet services.
(2:30 p.m.: Updated fifth paragraph)