Cablevision Systems Shares Slip 8 Percent on Disappointing Profit
Cablevision Systems Corp., the fifth largest cable provider in the US in terms of subscriber base, issued its first-quarter results Thursday, posting lower-than-expected operating profits as the company struggled to sign up new subscribers without offering steep discount packages. The report alarmed investors leading to a decline of nearly 8 percent in Thursday trading. Several analysts downgraded the stock, as well, and some lowered their target prices.
Cablevision's operating income slipped by about 7.5 percent from a year ago to $513 million in the three months ended March 30th. While the company was able to increase its paid subscriber count by 7,000 during the quarter, its 3.26 million subscribers are nearly 50,000 less than it had a year ago. As most of its subscriber additions have come through discount package promotions, analysts are concerned about what those subscribers will do if the company discontinues such offers and they must pay full price to continue subscribing.
In addition to its gains in pay television service, Cablevision also added about 42,000 customers each in the second quarter in its broadband Internet and home telephone divisions, exceeding Wall Street expectations in both areas. The company cited improved customer service and a decision not to increase rates for all its subscriber additions.