Cablevision Systems issued its Q1 08 earnings report this morning showing a solid return to basic cable subscriber gains and continued, albeit declining, growth in its digital, high-speed and telco customer counts. During the company's earnings call, the Long Island-based operator implied that the worst impact of stiff competition from Verizon is over. Still, to spur continued broadband growth, the company announced a new mesh Wi-Fi offering for its broadband customers.
During the quarter, Cablevision added 3,000 basic customers, compared to a basic sub. count gain of only 1,000 during Q4 07 and a loss of 17,000 customers during Q3 07. By quarter's end, Cablevision served 3.125 million core video customers, reflecting a 66.7% penetration of homes passed rate, the highest in the cable industry.
Cablevision also lays claim to the highest broadband and telephony penetration rates in the industry. (Download our spreadsheet for more detailed data on Cablevision.)
During the quarter, Cablevision added 62,000 net new high-speed customers, on par with the net broadband adds posted during Q4 07 but down from 79,000 for the year-ago quarter. By quarter's end, Cablevision counted 2.43 million high-speed customers, hitting for the first time the 50% penetration threshold for this service.
The number of Cablevision telephony customers grew by a net 93,000, down by 9% sequentially and 15% year-over-year. Still, Cablevision's take-rate for telephony was an industry-topping 36% by quarter's end, when the operator served a total of 1.7 million voice customers.
Digital TV service grew by a net 41,000 net new customers, a run-rate down by 5% sequentially and 36% year-over-year. By quarter's end, Cablevision served 2.7 million digital customers, representing 85% of all basic customers, again, the highest in the industry.
Telecommunications revenues (not including Cablevision's programming networks or related-business) advanced by 10% year-over-year to $1.2 billion, while operating cash flow jumped by 13% to $485.9 million.
During the earnings call, company execs dismissed the competition from Verizon. "Verizon was capable of serving a little less than 1.3 million homes in our footprint. Of those homes, approximately 1.1 million are capable of receiving video," COO Tom Rutledge. "In areas where the telcos compete with us in video, their impact on us is still single digit, even after more than two years of head-to-head marketing."
Given the stepped-up competition and the already high-levels of penetration, Cablevision plans to spur further growth in high-speed (and, in turn, telephony) by offering a new, no-cost mesh Wi-Fi option to broadband customers. "As more and more devices become WiFi-enabled, whether they be laptops, iPhones, BlackBerries or other portable devices, we believe we can create a compelling broadband wireless network throughout our footprint for our Optimum Online high speed data service customers," Rutledge said.
The service will be built out using existing facilities, minimizing the costs of building the new wireless network. At some point, Cablevision plans to use the network for mobile voice too.
The network will take two years to build out and cost around $100 per customer or $70 per home passed, a small price to pay to retain customers. "Given the fact that our customer revenue is approaching $1600 a year and cash flow of 650 a year per customer that creating this value proposition for customers will enhance our service and cement our relationships with our customers for the long haul," Rutledge said.
Posted by Cynthia Brumfield at 8:14 PM | Print | Comments (0)Yesterday was chock full of interesting news and developments but the necessity of actually doing real work got in the way of my blogging. I'm a day late here but a couple of key earnings reports issued yesterday are worth flagging today.
First, global entertainment, TV, publishing and now Internet giant News Corp. issued its fiscal Q3 08 results yesterday (PDF), showing strong performance, as usual, in its cable network division. (For more detailed News Corp. financial data download our spreadsheet.)
The most interesting thing to come out of News Corp.'s earnings call is that its interactive media unit, which includes Myspace, will miss its fiscal year revenue projections by 10%. One other thing: the company's net income soared due largely to a $1.67 billion gain made from the sale of its 41% stake in DirecTV to John Malone's Liberty Media.
News Corp.'s Rupert Murdoch may be glad he got rid of the DirecTV "turd bird," but the U.S. DBS provider, which also issued its earnings results yesterday, did just fine in Q1 08. DirecTV continued its healthy subscriber, cut churn, and boosted both revenues and operating income by 16% year-over-year. (Again, for more detail, download our spreadsheet with detailed data on DirecTV.)
In a first for the U.S. cable industry, a cable company CEO is blogging. Michael Willner, CEO of Insight Communications, has launched a pretty well-written blog called Michael's Insight.
Although Insight Communications is a tiny cable company in comparison to giants Comcast and Time Warner, Willner is an industry pioneer who garners a lot of respect, having twice been Chairman of NCTA, the industry's trade association. Insight just finished unwinding a partnership with Comcast, Insight Midwest, which left the company with around 700,000 basic customers in Indiana, Kentucky and Ohio.
Not only is Willner blogging, but he also claims to get most of his news from blogs these days. In today's post he says he reads Broadband Reports, an online community that I guess is technically a blog, before he even reads the New York Times. Willner's goal is to suss out customer service problems before they hit the mainstream media and to identify potential service improvements.
We institutionalized monitoring the blogs and now regularly reach out to customers who post if we think we can help them with their issue. Indeed, we often discuss service changes and improvements that were thought of simply by reading blogs.
As to why Willner is blogging, he wants to be a part of the dialog, not the usual sentiment for a cable (or broadcast or telco or Hollywood for that matter) CEO.
When it comes to communicating with the public, most companies take the safest path. They usually play their cards pretty close to their chest. I'm joining the blogosphere to challenge that "wisdom."
With Comcast monitoring Twitter and NCTA jumping into the blogosphere and now Willner blogging (and from what I can tell, he's doing his own writing -- no PR stuff), the once-mute cable industry continues to improve on its ironically lousy ability to communicate.
Blogs We Read
