Cablevision reports wider loss on increased revenues

Cablevision Systems today reported a wider third quarter loss, but an increase in revenues, primarily thanks to its core cable businesses.

The New York-based operator posted a net loss of $79.5 million, or 26 cents a share compared with a $77.1 million or 27-cents-a-share loss in the same quarter year. On the other hand, revenues rose 4% to $951.1 million from $911.5 million a year ago, based on strength in the company’s cable TV and business communications operations.

Cablevision got a boost from its digital cable and high-speed Internet services, both of which saw substantial revenue and subscriber increases and both of which are projected to continue growing, company executives said. Cablevision added 107,000 new high-speed data and digital cable customers in the third quarter, with average high-speed data revenue increasing 15% to $35.55 per month as 5300 new data customers signed on every week. It added 2900 new digital cable customers per week and predicted 5000 per week in the fourth quarter as completed network upgrades make digital available to 80% of Cablevision’s subscriber footprint.

A $5 to $10 monthly price increase for high-speed data service, instituted in July, has not slowed demand, said Tom Rutledge, president of the cable television group. “Demand is accelerating. Our high-speed data service is still priced significantly below our competitors in the New York market.”

Rutledge said the company is working on other pricing plans that will address “an opportunity to sell higher speeds, not lower speeds … but we have not gone to market and we don’t have an announcement yet to make,” he said.

At the same time, Cablevision lost 22,400 basic cable customers in the quarter, with 11,800 abandoning ship in July. That pace dropped to only 1300 subscriber losses in October.

Equipment costs also were lower. The MSO paid less than $50 for cable modems and average prices of around $215 for digital set-tops.

Revenues for Cablevision’s commercial Lightpath business increased 20% in the quarter as buildings on-net rose 25% and access lines increased 25%, the company reported.

“The commercial voice and data market is currently experiencing extraordinary levels of line reductions, as well as competitive price pressures,” said Joseph Lhota, executive vice president of corporate administration, who oversees the commercial business.

Lightpath’s cash flow increased 89% from last year’s third quarter and its cash flow margin rose 41.2% in September, compared to 29.2% in June, Lhota said.

“Market pressures will allow Lightpath to grow at a healthy pace, but not at the same levels experienced in the third quarter,” he said.

Cablevision also updated its 2002 revenue and cash flow guidance, with revenue forecast to grow between 9% and 11%, slightly lower than previous 10% to 12% guidance and cash flow forecast to grow between 15% and 16%, up from previous guidance of 15%.