Cablevision (NYSE: CVC) CEO James Dolan used his latest public speaking opportunity to hammer home his strategy of de-emphasizing video services in favor of high-speed data and connectivity.
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"The video product itself has lost a tremendous amount of margin," Dolan said at the Guggenheim TMT Symposium in New York. "Dollar-for-dollar, the data product outperforms the video product 7-to-1 at our company in terms of profit back to the company."
Noting that "data is now our No. 1 product," Dolan said Cablevision's Wi-Fi service now includes 100,000 public hotspots. He said that number balloons to 1.2 million when residential routers with dual-function public hotspot capabilities are factored in. He said that Wi-Fi usage among Cablevision customers has increased 60 percent over last year.
"We recognize that the connectivity experience that we offer is going to be crucial to being able to keep the customer," he said. That is why the company is looking at adding new services such as Wi-Fi, he added.
Conversely, in the area of video services, Cablevision finds itself in a vice of rising program costs coupled with pricing pressure from its fierce rival in the suburban New York multichannel business, Verizon FiOS (NYSE: VZ).
"The one thing that we see as being inevitable is a reduction in the number of customers that take the big bundle," Dolan said. "That is going to have an impact on the programmers. How much of an impact? My own personal guess is somewhere around 20 percent to 25 percent over the next five years."
Niche channels, which have proliferated on cable during the past two decades, will have a much tougher time in an unbundled industry. "You are not essential anymore," Dolan said.
Dolan had been publicly vocal about his desire to see the New York cable market consolidated, but that was only during Time Warner Cable's (NYSE: TWC) brief one-month tenure as a company not involved in a merger process.
Dolan was mum on the M&A subject during his Guggenheim TMT Symposium appearance.
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