Cablevision stock sinks on weak quarter
Investors pummeled Cablevision on Thursday after it posted a hefty loss in the fourth quarter, pulled into the red by lousy holiday sales at its retail chain the Wiz and sluggish box office for events at company-owned venues Madison Square Garden and Radio City Music Hall.
Cablevision lost $282 million in the quarter, compared with a $557 million profit in 2000, including one-time gains on sales of cable and programming assets. For the year, the cable operator reported a profit of $1 billion, again thanks largely to asset sales.
Meanwhile, revenues rose 3.5% in the quarter but were almost unchanged for the full year 2001.
Hurt by attacks
The New York-area cable operator, which holds stakes in programming, venues and pro sports teams, said problems at the Wiz and the venues stemmed in large part from decreased tourism and spending in Gotham following the terrorist attacks on the World Trade Center.
“They’re bleeding here, there’s no question about it,” said Sean Badding, a cable industry analyst with the Carmel Group. “They got hit twice — first in the region of New York and second in the overall economy — and so it’s going to be twice as hard for them to get back on their feet.”
But Wall Street was unsympathetic, bidding the company’s shares down Thursday nearly 8% to $36. Slump follows a protracted decline across the cable sector as worries mount over slowing subscriber growth, particularly for new services like digital video and high-speed Internet.
Right on cue, Cablevision admitted that rollout of its Optimum digital video service is progressing far more slowly than analysts expected. Company signed up only 17,000 customers in 2001, compared with predictions of 40,000-50,000 new users.
Sept. 11 bump for subs
Ironically, Cablevision said it got a small bump in subscribers to its basic cable service in the fourth quarter because of the Trade Center disaster. Many viewers who had relied on broadcast signals were left without any service at all when TV antennae on the towers came down. Overall, the company reported a 1.6% rise in cable subscribers for the year — above the industry average of 0.5%-1%.
One bright spot on Cablevision’s financial statement was Rainbow Media Group, the cabler’s majority- owned cable programming venture. Rainbow, whose properties include the Independent Film Channel, Bravo and American Movie Classics, reported gains of 22% and 7% in revenue and operating cash flow respectively.