[opendtv] Weak Q3 for Cablevision | Multichannel
- From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
- To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
- Date: Fri, 7 Nov 2014 09:52:32 -0500
Reading the fine print...
Bert will no doubt look at this and say: TREND!
But there is one paragraph that provides some insight about "the trend."
> Cablevision said the decline in video and broadband customers was due in part
> to more stringent credit and promotional policies. On a conference call with
> analysts, Cablevision chief operating officer Kristin Dolan said that meant
> the cable operator was not marketing to customers that have a history of not
> paying their bills or to households with bad credit histories. While that
> does reduce the marketable base of potential customers, she said it will
> result in a more profitable sustainable customer.
Much like the analysts who follow the smartphone industry, Bert is too focused
on market share trends. The smart money follows, well the money. Apple does not
try to win market share, they focus on the customers with money who are willing
to pay for the Apple ecosystem and in turn make up a large portion of total
economic activity through the Apple ecosystem.
http://www.multichannel.com/news/news-articles/weak-q3-cablevision/385344
Weak Q3 for Cablevision
Cable operations revenue rose 5% in the third quarter at Cablevision Systems,
mainly due to price increases for broadband and video services, as basic video
customers fell by 56,000 and broadband subscribers, once the main growth engine
for the company, dropped by 23,000.
Adjusted operating cash flow increased by 5% at its cable operations, mainly
due to rate increases. That was evident by a strong jump in average monthly
revenue per video customer, up $12.66 to $177.27.
Consolidated revenue – which includes its Lightpath operations – was up 3.7% to
$1.6 billion in the period and AOCF rose 7% to $$71 million.
Cablevision said the decline in video and broadband customers was due in part
to more stringent credit and promotional policies. On a conference call with
analysts, Cablevision chief operating officer Kristin Dolan said that meant the
cable operator was not marketing to customers that have a history of not paying
their bills or to households with bad credit histories. While that does reduce
the marketable base of potential customers, she said it will result in a more
profitable sustainable customer.
The basic video losses were the largest since the fourth quarter of 2012 when
the company shed 50,000 customers in aftermath of Superstorm Sandy, which
caused billions of dollars of damage in Cablevision’s service territory in Long
Island and the New Jersey shore.
In a research note, MoffettNathanson principal and senior analyst Craig Moffett
said Cablevision’s basic video subscriber losses are about twice those of its
peers (4.2% versus 2.1%) and it lost broadband customers while its peers are
growing that segment at a 5.6% annual rate.
“Faced with falling subscriber numbers, Cablevision is left with but one lever
to pull to sustain growth: they are aggressively raising broadband prices,”
Moffett wrote. That is a strategy that supports near –term cash flow growth,
but “exacerbates the longer term vicious cycle of falling subscribers and, as
scale is lost, further margin declines,” Moffett added.
Cablevision stock was down as much as 4% in early trading Thursday, but
rebounded later in the day. It was trading at about $18.40 per share at noon
Nov. 6, down just 15 cents (1%) per share.
Cablevision has faced fierce competition from Verizon Communications’ FiOS TV,
which added about 114,000 video customers in the third quarter. Cablevision has
the greatest exposure to Verizon of any other cable operator.
On the conference call, Cablevision CEO Jim Dolan wondered aloud how Verizon,
which he said has gone after Cablevision customers with tremendous zeal,
manages to sustain a business that he believes is bleeding money for the telco.
“Verizon, in our opinion, continues on a path of pursuing the destruction of
their own capital,” Jim Dolan said. “We don’t believe that they are profitable
on any level in our service area. They rabidly pursue us in an attempt to try
and get customers. I think our strategy is actually working quite well because
we are giving them all the customers we think are the most expensive customers
and the ones that provide the least free cash flow to us. I think you can see
that in our results. As we reduce customers, still our AOCF continues to go
up.”
Cablevision has made some recent moves to tap into underserved markets in its
territory – it launched an Internet Basics package during the quarter in
Newark, N.J. and The Bronx, N.Y., which offers lower-income households 5 Mbps
high-speed data service for $24.95 per month (plus a $4.95 monthly modem rental
fee). And Dolan hinted at plans to further monetize WiFi service – Cablevision
customers he claimed have access to more than 1 million WiFi hotspots – that
will focus on the enhanced value WiFi brings to its broadband service.
Other related posts:
