Cablevision's video losses accelerated to 28K in Q2 thanks to FiOS

Cablevision Systems (NYSE: CVC) reported second quarter revenue growth of 3.7 percent to $1.6 billion, and a 29.4 percent growth in consolidated operating income to $255.9 million, both beating the consensus projections of investors.

But the New York cable operator continued to suffer from its heavy competitive exposure to Verizon FiOS (NYSE: VZ), losing 28,000 video subscribers in the second quarter, compared to the 20,000 it lost in Q2 2013 and the 18,000 net loss projected by investor consensus.

Cablevision also lost 9,000 broadband customers (vs. a gain of 3,900 in Q2 2013), as well as 7,000 voice subscribers (gained 3,000 in last year's second quarter).

FiOS Overlap: As media analyst Craig Moffett points out, Cablevision's video subscriber base is shrinking at a rate three times as fast as competitors Comcast and Charter (NASDAQ: CHTR), and it's the only major cable company that's not growing its broadband subscriber base.

The company suffers from an industry-leading amount of exposure to Verizon FiOS, with a competitive overlap 10 times higher than Charter and three times bigger than Comcast. 

The path forward is Wi-Fi? Cablevision, which recently deployed its 1 millionth Wi-Fi hotspot in an attempt to compete with cellular company's for out-of-home data usage, stressed the proliferation of Wi-Fi as a key growth engine going forward. 

Cablevision officials used their Tuesday conference call with investors to tie the just-announced hiring of former Yahoo technology executive David Dibble to their Wi-Fi plans, which they say they have only begun to exploit. 

"We see the data product as more important than the video product to the customer right now," said Cablevision CEO James Dolan, who cited the company's recent investment in Wi-Fi infrastructure. "We have a strategic advantage that we haven't yet exploited. But there's no reason to think we won't. It's connectivity the consumer really wants. And connectivity isn't just about how fast data is passed back and forth. It's when you have a problem, or you want to connect a new device, how quickly does the company adapt, and how friendly and accessible are they. Those are the things we think will make the difference in the marketplace. I'm very optimistic about what we call data."

Regarding a recent move by Verizon to increase upload speeds so that they're symmetrical to download rates, Cablevision executives said their current maximum upload speed of 35 Mbps is more than fast enough to serve the vast majority of their customers. 

"I have no interest in chasing that dog around the track," added Wilt Hildenbrand, senior advisor, customer care, technology and networks for Cablevision. 

For more:
- read and hear this Cablevision earnings presentation

Related links:
Cablevision taps former Yahoo exec Dibble to newly created CTO position
Cablevision expands board, adds industry vet Steve Simmons
Cablevision tops 1 million Wi-Fi hotspots, upping ante in challenge to cellular