Cablevision (NYSE: CVC) reported significant losses of 56,000 TV subscribers but saw overall revenue increase 3.7 percent to $1.63 billion, driven by higher customer fees.
Dolan (Source: Cablevision)
It was the worst quarterly sub loss ever for Cablevision, even surpassing the Hurricane Sandy-ravaged fourth quarter of 2012, with Verizon (NYSE: VZ) offering aggressive promotions targeting Cablevision's Northeast footprint. Cablevision executives insisted they're happy to give up unprofitable "nonpaying" customers to Verizon and that the results of this transaction are reflected in the company's increased cash flow.
Verizon added 114,000 FiOS customers in Q3.
"Verizon continues on the path of pursuing destruction of their own capital," Cablevision CEO James Dolan told investors. "I don't believe they are profitable on any level in our service area. They just rabidly pursue us in an attempt to get customers. And we're giving them all the customers who are the most expensive customers. You can see that in our cash flow. Verizon doesn't break out any of those numbers. That would be a good trick if you could do that. Being their competitor, we can tell you they're not making any money."
The MSO reported a profit of $71.9 million from continuing operations for the third quarter, up 20 percent from the year-ago period.
Cablevision also lost 23,000 broadband customers in the third quarter. The MSO now has a total 3.2 million customers across residential and business channels, down 36,000 year-over-year.
As all captains of pay-TV industry have been, Dolan was asked about the impact of recent over-the-top service launches by programmers.
"We're starting see a significant number of suppliers start to move in this direction," he said. "They're priced significantly above what we charge the consumer. I don't know that it's necessarily disruptive for us as a multichannel provider, but we're keeping our eye on it. Cord cutting and over-the-top is something that's going to happen and we're preparing for it."
Does Cablevision have any plans to launch over-the-top pay-TV services of its own, similar to what's being planned by Dish Network (NASDAQ: DISH)?
"We have no intentions of going outside our footprint with ovr the top right now," Dolan said. "We don't really know how valuable a business it's going to be. We don't see it as something that would be a strategically good move on our part right now."
Dolan also addressed his company's Wi-Fi deployment, which currently stands at around 1 million hot spots. "Ultimately, every subscriber can have [a dual SSID router]," he said, "so we can go much deeper than 1 million. Our ultimate goal is to have Wi-Fi available everywhere."
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