Cable TV operating income drops 15%

Cablevision added broadband subscribers during the second quarter, but the better news in Tuesday’s earnings was that it didn’t lose a significant number of video subscribers.

The Bethpage, New York-based cable operator gained 25,000 and 23,000 high-speed data and voice subs, respectively, from the first to second quarters, while video was flat. It was the only major cable operator not to lose video subscribers for the quarter, ending the period with 3.25 million subs.

In year-to-year comparisons, however, Cablevision’s video subscriber numbers dipped from 3.28 million at the same point in 2011.

Cablevision had a total 3.6 million subscribers who receive at least one of its services.

Overall, Cablevision reported a 28% plunge in net income to $64 million, on tough comparisons from the year before when AMC Networks was part of the business. Revenue was flat at $1.7 billion. Profit would have been down about 8% without the impact of AMC, which was spun off into a separate public company. 

But Cablevision’s numbers for the quarter generally topped analysts’ expectations.

CEO James Dolan said on a conference call the company’s continuing to invest heavily to expand its network including WiFi on-the-go and HDTV offerings. It’s been focused on pushing back at Verizon, which has a strong New York-area footprint, and may be having some success. ISI Media analyst Vijay Jayant noted that Verizon and AT&T “came through with the weakest net ads for as far back as we can remember.”

Capital spending rose 38% to $296 million last quarter and the company could continue to spend heavily throughout the second half and into 2013.

Dolan said the company’s working on 18 new initiatives and is committed because “we think that overall they’re very good for the health of the company and customer satisfaction.”

With the spending cutting into cash flow, Wall Street would like to know more about those initiatives — but Dolan didn’t go into detail. “Understanding the trajectory of capital expenditures, especially new projects, is critical to the investment thesis around Cablevision,” said BTIG’s Richard Greenfield.

Cablevision also owns Clearview Cinemas, which it wants to sell, and Newsday newspaper.

Rival cabler Charter Communications, now run by former top Cablevision exec Tom Rutledge, narrowed its losses to $83 million from $107 million. Revenue rose 5.2% to $1.9 billion.

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