Updated from 10 a.m.
swung to a loss in the latest quarter Monday, with strong cable TV results hit by an $82 million loss at its startup direct broadcast satellite operation.
For its second quarter ended June 30, Cablevision lost $187 million, or 65 cents a share. That reverses the year-ago profit of $158 million, or 54 cents a share. Analysts surveyed by Thomson First Call had forecast a 40-cent loss.
Revenue rose to $1.21 billion from $973 million a year earlier, beating the First Call consensus of $1.14 billion.
Adjusted operating cash flow -- a cash flow measure equivalent to earnings before interest, taxes, depreciation and amortization, and excluding employee stock-related charges -- amounted to $435.4 million for the quarter. After subtracting out one-time payments and credits at Cablevision's Madison Square Garden property, the adjusted OCF number amounted to $329.3 million, ahead of the $306 million First Call number.
The Long Island-based cable television system operator said cable television revenue rose 17% in the latest quarter, while adjusted operating cash flow rose 24%. The company also affirmed 2004 guidance in many categories, while notching its adjusted cash flow and revenue guidance a percentage point higher.
Unlike other cable operators, which have reported greater-than-expected subscriber losses in the seasonally slow second quarter, Cablevision said it added 7,500 basic subscribers in the quarter, a gain that appeared to be ahead of analysts' expectations.
On a conference call with analysts, the company emphasized the success of a closely watched promotion it launched earlier this year, in which new customers could sign up for a bundle of video, high-speed Internet and telephony service for the remarkably low price of $90 a month. Analysts had wondered whether that discounting presaged a price war between Cablevision and other operators on the one side, and bundling-minded telcos on the other.
Because customers taking the promotion often take additional services, Cablevision said that respondents were actually generating an average of $110 per month in revenue. More than 20% of all new customers signing up for service took the three-product bundle, according to Cablevision, and the promotion pushed the percentage of new signups taking digital cable from 70% to 80%.
Regarding telcos' responses to their promotion, Cablevision execs said they had seen no price cuts from
, the dominant regional Bell operating company in the New York metropolitan area.
Another topic of discussion on the call was the progress of Voom, the high-definition TV satellite service that Cablevision launched earlier this year. The company plans to spin off Voom and Cablevision's national programming services into a separate company, called Rainbow Media Enterprises, and is in the midst of raising the financing for that spinoff.
Reporting $2.7 million in revenue and an $81.5 million operating loss for Voom, Cablevision said the service had 25,000 customers as of the end of June. To date, the company said, nearly 20% of signed-up customers had dropped the service, or churned off. For purposes of comparison,
reported an average monthly churn rate of 1.4% in its latest quarter.
The company said Voom's operating loss and adjusted OCF deficit of $71.8 million were primarily attributable to subscriber acquisition costs, content development costs for the Voom high-definition channels, and general and administrative expenses.
"For the second quarter, Cablevision's video, high-speed data, voice and Lightpath businesses generated excellent results, reporting a 17% increase in net revenue," CEO Jim Dolan said. "In the second quarter, we led the cable industry in the growth of high-speed data, ending June with a 27% penetration rate. Cablevision has also achieved, in a short period, a nearly 40% penetration rate for digital video and enjoys enthusiastic consumer response to our digital voice offering, which added 44,200 customers in the second quarter.
"Rainbow Media's core networks continued to achieve outstanding results in the second quarter with a net revenue increase of 56%, driven largely by increases in both affiliate fee revenue and advertising revenue," Dolan added.
Shares in Cablevision have been trading near 52-week lows in spite of the last weeks' tumultuous action. Cablevision rose in late July on news that it would
limit its investment in Voom and then surged again last week on news of a takeout bid for
by its closely held parent.
At midday Monday, Cablevision was down 38 cents at $16.76.