Cablevision Systems Corp. (CVC:US), the fifth-largest U.S. cable provider by subscribers, dropped the most in a year after Superstorm Sandy’s devastation led to a fourth-quarter operating loss.
The net loss from continuing operations was $83.7 million, or 32 cents a share, compared with a profit of $60.5 million, or 22 cents, a year earlier, the company said today in a statement. Sales fell 1.6 percent to $1.66 billion, missing the $1.7 billion average of analyst estimates compiled by Bloomberg.
“The enormous challenges of Superstorm Sandy had a strong negative impact on our fourth-quarter results,” Chief Executive Officer James Dolan said in the statement.
Sandy, which knocked out power to almost 2 million customers, added $111 million in costs in the period. While the storm didn’t affect capital expenditures, it pushed back “initiatives” including improving Internet speeds, by about two months, Dolan said on a conference call.
Cablevision’s shares (CVC:US) fell 9.6 percent to $13.99 at the close in New York, the biggest decline since Feb. 28, 2012. The stock has dropped 6.4 percent this year, as the Standard & Poor’s 500 Index has gained 6.2 percent.
Cablevision lost 50,000 video customers, 5,000 high-speed Internet subscribers and 10,000 voice customers -- all of which were worse than analysts had predicted. It’s the first time Cablevision has ever reported a loss of Internet customers in a quarter. Some of the losses were customers located in areas damaged by Sandy who Cablevision stopped billing and has been unable to contact.
Cablevision serves about 3 million customers in New York, New Jersey, Connecticut and parts of Pennsylvania. The cable provider agreed to sell its Optimum West division for $1.63 billion to Charter Communications Inc. (CHTR:US) earlier this month, a move that will shed the company’s operations in Western states.
Selling Optimum West “removes a high growth asset,” Jayant, who is based in New York, said in an interview. The question now is whether Cablevision can keep increasing earnings at a time when programming costs are rising and subscribers are shrinking, he said.
Programming costs are set to rise by about 12 percent in 2013, Chief Financial Officer Gregg Seibert said on a conference call. The expense increase will contribute to adjusted operating cash-flow “pressure” in the first quarter, Seibert said.
“We continue to consider and implement changes to our pricing as appropriate,” he said.
Cablevision announced in December that it was raising prices on its Internet subscribers by $5 a month, the first increase on broadband users in a decade. The Bethpage, New York- based company also announced this month it will begin charging customers an additional $2.98 a month to pay for the rising cost of sports programming.
The company didn’t buy back any shares in the fourth quarter as it assessed Sandy’s costs and doesn’t anticipate repurchasing any in the first quarter of 2013, Seibert said.
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