Cablevision sees surge in subscribers

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Cablevision, the cable operator based in the New York area, strongly increased its subscribers for its video, internet and telephone services in the fourth quarter despite growing competition from telephone rival Verizon.

The company reported revenue growth of 18.6 per cent for its cable business, but its overall performance was lower due to a weaker performance of other divisions such as its cable networks and the Madison Square Garden sports venue.

The Dolan family, which controls Cablevision, tried to take the group private but its offer was rejected by a committee advising the board after the family refused to raise it further.

The company’s results show that its ability to gain customers due to its popular “triple-play” bundle continues, but Cablevision suggested its growth had peaked. In 2007, Cablevision said cable revenues would be in the “mid-teens”, down from over 18 per cent in 2006.

“Growth is no longer accelerating but it is certainly not hitting a wall, either,” said Craig Moffett, analyst at Sanford Bernstein.

“Despite the impressive growth, we remain cautious about Cablevision’s ability to sustain their industry-leading momentum in the face of mounting penetration for all of their advanced services and a Verizon competitive threat,” he said.

Verizon, one of two telecoms giants in the US, is upgrading its systems and offering high-speed internet and video services alongside its traditional telephone connections in the New York area, meaning it will particularly compete with Cablevision.

Higher interest expenses and charges related to contract disputes, as well as expenses related to its New York Knicks basketball team, led to a loss in the fourth quarter of $23.9m, compared with earnings of $64.6m a year ago.

Total revenues rose 13 per cent of $1.69bn, from $1.49bn a year ago, Cablevision said.

For the cable business, revenues increased by 18 per cent to $1.2bn, with operating income up 12 per cent versus a year ago to $195m, Cablevision said.

The company said it would reduce its capital expenditure in 2007. Comcast, the biggest cable operator in the US, caused investor concerns after it said it would increase its capital expenditure.

Comcast is behind Cablevision in terms of the number of subscribers it offer the triple-play bundle to.

“[Cablevision’s] capex guidance implies a decline in 2007,” said Aryeh Bourkoff, analyst at UBS. “This is a positive read-through for Comcast as some investors have been concerned that capex is on the rise for the industry.”

Cablevision shares were steady on Tuesday at around $28.9 per share. Together with other companies in the cable sector, the company’s shares have gone up sharply since last April when they were trading at just over $19 per share.

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