Basic-Cable Nets Propel Cablevision Q2 Earnings
Cablevision Systems: Core operations made gains, basic-cable networks particularly robust.
By Robert Marich -- Broadcasting & Cable, 7/31/2008 7:57:00 AM
Impressing stock analysts, Cablevision Systems posted an 18.5% rise in consolidated adjusted operating cash flow for the second quarter and reported that its core operations made gains, reflected by a 9.2% jump in revenue. Its basic-cable networks showed particularly robust results.
Cablevision’s earnings report Thursday continued a budding trend of earnings of cable-system operators surpassing those of telco rivals in the April-June time frame, following a solid subscriber-count performance by Comcast.
In comparison to the first quarter, Cablevision gained 7,000 basic-video subscribers, totaling 3.132 million at the end of the second quarter. Its second-quarter basic-subscriber count was down 7,000 from a year ago, although still impressive given growing competition.
“Cablevision is very well-positioned to weather the effects of increased competition and a weakening economy,” noted a short research report from Merrill Lynch. Morgan Stanley calls the results “solid” and noted that profit margins held up.
While analysts were upbeat on core operations, bottom-line results were skewed by a big onetime gain a year ago from Cablevision selling its stake in a regional sports network -- a distortion analysts overlooked.
In the quarter ended June 30, Cablevision’s net income dropped 69% to $98.3 million, or 34 cents per share, from $317.4 million ($1.10) in the same three-month period a year ago that was inflated by the one-time gain. Revenue reached $1.71 billion for a 9.2% increase.
The company is a large cable-system operator, but it also owns basic-cable networks and sports teams and is in the live-events business. Its Rainbow Media Holdings cable-networks segment -- which includes AMC, WE tv and The Independent Film Channel -- reported that adjusted cash flow soared 71.6% to $72.3 million and revenue climbed 14.6% to $239.7 million.
In a conference call with investors, Cablevision brass expressed frustration with its sagging stock price, which it feels should be higher given financial performance, and they promised to explore ways to raise the share price. The company hopes this will also help to lower the interest expense on its hefty $11.9 billion in debt.
The company concluded its $650 million acquisition of a 97% stake in suburban newspaper Newsday Tuesday, which came after the second quarter closed, and earlier wrapped the $496 million buy of Sundance Channel.
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