This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Cablevision Is on the Verge of Unlocking Great Value

Stocks in this article: CVC DTV AMCX TWC

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

By Dave Sterman

NEW YORK ( StreetAuthority) -- I spend much of my time in search of companies that possess robust growth prospects. But I'm also content to occasionally focus my energy on companies that are unlikely to grow meaningfully. The catch: these companies must be able to generate a huge amount of profit from their sales base in a consistent manner. Or they need to own a set of assets that would be highly coveted by other firms in an industry.

I think I've found a company that checks off both of those boxes.

New York-based Cablevision (CVC) generates stunning amounts of free cash flow. And recent events make me think the company may soon receive a very flattering offer from a rival or a private-equity (PE) firm.

An industry that has peaked

It's no secret cable companies face myriad threats. Some consumers have balked at $100 monthly bills and are now content to simply surf the web for their evening's entertainment. (In the case of Cablevision, we're talking about a $150 average monthly bill.) Other consumers are ditching their cable providers for satellite-based providers such as DirecTV (DTV) (which, incidentally, can consider me a very happy new customer after making a recent switch).

But rumors of cable's demise are greatly exaggerated.

The vast majority of consumers are sitting tight, continuing to get cable service along with Internet access and phone service -- all from a company with which they already have a longstanding relationship.

Simply put, cable companies such as Cablevision, which already has 3.6 million customers, are hard-pressed to find any new customers at this point in their life cycle. At the same time, they are not likely to see their customer base materially shrink, either. So their real focus is on squeezing out profits from every bill. And boy, is Cablevision profitable.

In 2010, for instance, Cablevision generated $7.2 billion in revenue and $2.6 billion in EBITDA. This worked out to be 36% EBITDA margins, which is quite impressive in any industry, let alone one that is mature and subject to fierce competition.

1 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,103.06 +72.85 0.40%
S&P 500 2,091.30 +9.42 0.45%
NASDAQ 4,797.6540 +24.1820 0.51%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs