Reuters: Global Markets: Cablevision adds subscribers, to shop around movie chain

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Cablevision adds subscribers, to shop around movie chain May 3rd 2012, 21:44 By Liana B. Baker Thu May 3, 2012 5:44pm EDT (Reuters) - Cablevision Systems Corp (CVC.N) added more video subscribers than expected in the first quarter, but its shares fell 8 percent as investors balked at the declining profit and cash-flow growth it reported on Thursday. Chief Financial Officer Gregg Seibert said on a conference call that the company planned to explore strategic alternatives with its Clearview Cinemas movie theater chain, which had 45 theaters in the New York tri-state area including the Ziegfeld Theater in New York City. "It is not a strategic asset for us," Seibert said, adding the company was in the early stages of exploring its options in a process it hopes will be "robust." Cablevision had previously tried to sell the chain in September 2002. Seibert declined to comment on the movie chain's earnings before interest, taxes, depreciation and amortization but said "it's a negative number." Bernstein analyst Craig Moffett estimates Clearview Cinemas to be worth $48 million, or $1 million per theater, while the Ziegfeld Theater, the 1,169-seat gold-trimmed theater in midtown Manhattan, could be worth an additional $25 million. The announcement came after Cablevision said it added 7,000 video subscribers in the first quarter, reporting its first gain in new cable TV customers in at least six quarters, driven by a new pricing strategy. But investors sold off the stock on Thursday over concerns about Cablevision's slowing financial growth. It has been investing more in infrastructure and offering discounts on its services, which pushed down its operating cash flow by 7.6 percent from a year ago to $513.5 million. Cablevision said at the end of February that it did not plan to raise prices this year, which surprised investors and sent its shares tumbling more than 10 percent at the time. "It's pretty clear Cablevision gathered up themselves and fought back to stop the bleed in subscribers, but my question is, is their pricing strategy sustainable?" Brean Murray analyst Todd Mitchell said. WORK TO DO A string of senior executives departed from Cablevision last year and CEO James Dolan said on Thursday there are no plans to replace them. Dolan has been overseeing operations since Chief Operating Officer Tom Rutledge left the company last December. Rutledge is now CEO of Charter Communications (CHTR.O), another cable operator. "I plan on staying right where I am, in the operating role that am I'm in, for some time, I would anticipate, at least through this year and beyond, because we have a lot of work to do," Dolan said on the call. The gain of 7,000 subscribers beat the loss of 7,400 that Wall Street analysts were expecting according to StreetAccount data. The company added 42,000 high-speed data customers, beating StreetAccount estimates of 22,000. But it made $1.57 less per subscriber compared with a quarter ago. "Unfortunately, subscriber growth is only half the story. Cable operators also depend on (revenue per subscriber) growth ... and good old-fashioned price increases," Bernstein analyst Craig Moffett said in a research note. Cablevision, which also owns a newspaper and local cable networks, posted first-quarter earnings of $57.2 million, or 21 cents a share, which beat analysts' estimates by 2 cents a share, according to Thomson Reuters I/B/E/S. Revenue rose 0.2 percent to $1.66 billion. Cablevision's shares closed down $1.16, or 7.9 percent, at $13.54. (Reporting by Liana B. Baker; Editing by Lisa Von Ahn, Maureen Bavdek and Richard Chang) Link this Share this Digg this Email Reprints

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