(Adds analyst's comment, comment from COO)
NEW YORK - Cablevision Systems Corp
posted Thursday an unexpected rise in cable
subscribers in the first quarter, and outlined a $350 million
plan to build a high-speed wireless Internet network.
The cable operator, run by the Dolan family, has pushed
into new growth areas and is aggressively pursuing
acquisitions. An agreement to buy the Sundance Channel
independent film network and a bid for the newspaper Newsday
could cost it more than $1 billion in total.
On Thursday, the company announced plans to build a Wi-Fi
wireless broadband network for its New York area subscribers
within two years.
Cablevision said the network would be free to existing
customers using Wi-Fi-enabled portable devices such as iPhones
and laptop computers. See [ID:nN08371486]
Wall Street analysts expressed skepticism over the plan.
"Why is this going to be any different to all the other
Wi-Fi networks that failed?," said Tom Watts, an analyst at
Cowen & Co, citing EarthLink Inc as an example.
"It's also unclear to me what the returns are," he added.
In the first quarter, Cablevision added 2,000 basic video
subscribers, beating most analysts' expectations.
Eight analysts polled by Reuters had expected Cablevision
to lose an average of 4,000 subscribers as competition from
Verizon Communications' FiOS TV and Internet service
made gains in Cablevision's Long Island, New York region.
"Cablevision showed again that it more than holds its own
in an increasingly competitive environment," said Chris
Marangi, a portfolio manager at Gabelli & Co, a major
Cablevision shareholder.
Marangi, who had originally expected Cablevision to lose up
to 10,000 subscribers, said he had grown more optimistic after
peers like Comcast Corp and Time Warner Cable Inc
posted strong subscriber gains earlier this month.
Cablevision shares were up 1.6 percent at $24.13 in
afternoon trading on Thursday.
RAINBOW MEDIA EXPANDS
Cablevision Chief Operating Officer Tom Rutledge told
analysts on a conference call that, based on current trends,
the worst was over in its competition with Verizon. He said the
company did expect the phone operator's 2008 roll-out of FiOS
to be as aggressive as last year.
"We are doing quite well (against Verizon) I think in
general," said Rutledge. "In places where we have been in
business two years against them, our losses are in the
single-digit range," he said.
Cablevision added 41,000 digital video subscribers and
61,000 high speed Internet subscribers during the quarter. It
also added another 93,000 digital phone subscribers.
Bernstein Research had expected Cablevision to add 85,000
digital video subscribers, 38,000 high speed Internet
subscribers and 70,000 digital phone subscribers.
Cablevision reported a first-quarter net loss of $31.6
million, or 11 cents a share, compared with a net loss of $26.3
million, or 9 cents a share a year ago. The wider net loss was
partly caused by a $105 million loss on derivative contracts.
Revenue rose 10.1 percent to $1.721 billion.
Wall Street analysts had on average expected a profit of 2
cents a share on $1.71 billion revenue, according to Reuters
Estimates.
Average revenue per subscriber rose 11 percent to $129.56
from the year-ago period.
Cablevision's Rainbow Media unit, which houses cable
networks such as AMC and IFC, posted a 16 percent rise in net
revenue to $225 million during the quarter.
Rainbow will become home to Robert Redford's Sundance
Channel when the transaction closes. See [ID:nN07197605].
(Reporting by Yinka Adegoke; Editing by Derek Caney, Toni
Reinhold)
By: Yinka Adegoke
Copyright 2008 Reuters. Click for Restrictions
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