(Updates with closing share price in sixth paragraph.)
Oct. 28 (Bloomberg) -- Cablevision Systems Corp., the fifth-largest U.S. cable-TV provider by subscribers, dropped 13 percent after reporting profit that missed analysts’ estimates because of rising programming and marketing costs.
Net income fell 65 percent to $39.3 million, or 14 cents a share, Bethpage, New York-based Cablevision said today. Analysts predicted 32 cents, the average of estimates compiled by Bloomberg.
Cablevision boosted spending on programming and promoting its video, phone and broadband services. The company probably aimed to take advantage of a strike by employees at rival Verizon Communications Inc., said Bryan Kraft, an analyst at Evercore Partners in New York, although Chief Executive Officer James Dolan said marketing strategies were already in place.
“Not all of our results in the quarter are where we want them,” Dolan said on a conference call.
Cablevision’s market has a 40 percent overlap with Verizon’s FiOS pay-TV product, leading to a “hyper-competitive dynamic” that makes it difficult for the company to grow, said Todd Mitchell, a Brean Murray Carret & Co. analyst in New York.
Cablevision fell to $15.14 at the close in New York. The shares have declined 36 percent this year.
Sales rose to $1.67 billion, meeting the average analyst projection. The company incurred a $16 million expense related to Hurricane Irene and a $95.4 million loss on investments.
The company lost 19,000 video subscribers, fewer than the 26,000 average estimate of nine analysts surveyed by Bloomberg. Broadband customers rose by 17,000 and telephone customers increased by 38,000. Both topped estimates of analysts, who predicted 6,700 high-speed data additions and 12,000 more voice customers, on average.
“The net adds are good,” said Vijay Jayant, an analyst at International Strategy & Investment Group in New York.
In June, Cablevision spun off AMC Networks, which owns television stations AMC, Sundance Channel, IFC and WE tv.
Cablevision bought back $93.9 million in shares in the quarter, less than the $143.9 million it spent in the second quarter. The company will not increase its leverage ratio to buy back more shares, Chief Financial Officer Gregg Seibert said on the conference call.
--Editors: Ville Heiskanen, Peter Elstrom
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