Cablevision stung by Q1 price cuts
- Last Updated: 1:30 AM, May 4, 2012
- Posted: 12:01 AM, May 4, 2012
It’s not easy — or cheap — to defend your turf in today’s fiercely contested Pay TV sector.
Cablevision CEO James Dolan was taught that lesson again yesterday after investors, spooked by a larger-than- expected decline in free cash flow at the company, bid down the stock of the Bethpage, NY-based company 7.9 percent.
The stock drop erased all of Cablevision’s 2012’s gain and left the country’s No. 5 cable company down 43 percent over the past 12 months.
“They were the only distributor that didn’t institute a price increase,” Nomura Securities analyst Mike McCormack told The Post, highlighting his issue with the drop in cash flow.
Other analysts hit Dolan for the company’s troubles at chalking up financial gains — despite adding 7,000 new video, 42,000 broadband plus phone customers in the quarter.
Indeed, Cablevision has been particularly aggressive of late in trying to win customers back from Verizon FiOS. The Post reported in February that Cablevision had offered customers triple-play — cable TV, high-speed Internet and phone — service for as little as $69.95 in January, although it was a one-week, one-time effort.
The current price, according to Cablevision’s website, is currently $89.85.
McCormack said an 8 percent jump in programming costs, coupled with increased investment in improving customer relationships, and products such as its network DVR, prompted the sell-off. He sees pressure on profits persisting for the next few quarters.
Meanwhile, the company hinted it would sell off its Clearview Cinema chain, which includes Manhattan’s famous Ziegfeld Theater.
The strategy follows a pattern of Cablevision spinning off divisions from MSG to AMC Networks. At least one analyst sees such a move as a precursor to a sale.
Bernstein Research’s telecom analyst Craig Moffett, though, doesn’t see a management buy-out.
Cablevision shares closed yesterday at $13.54.