Cablevision’s losses narrow, yet shares dip

Co. cut expectation growth to 16%-18%

A conservative Cablevision delivered a mixed message to Wall Street Tuesday and was rewarded with a 7% drop in its share price.

The New York area media group narrowed its first-quarter loss to $140.4 million, compared with $249.6 million in the same period last year but warned that its earlier EBITDA targets of 18%-20% growth for the full year may have been overly optimistic.

The company cut its expectation to 16%-18%, citing higher-than-expected program costs associated with its recent acquiescence to carrying the YES sports channel. The company also said it would be increasing its capital expenditure forecast to $750 million-$775 million, thanks to higher-than-expected digital penetration.

Cablevision reported net revenues up 8% for the first three months of the year over the prior-year period to $982.1 million.

While Cablevision ended Q1 with 401,000 digital video subs, netting a hefty 185,000 new customers, it nevertheless posted basic sub losses of 12,000 compared with only 5,000 the previous quarter due to higher-than-anticipated churn from the reshuffling of its channel lineup. Company also added nearly 84,000 new high-speed customers.

However, tougher competition from telco Verizon, which on Tuesday announced a significant price cut on its high-speed DSL product as well as a new Wi-Fi wireless broadband offering in conjunction with MSN, could make future gains for Cablevision harder to come by.

Its Rainbow Media Core networks, which comprises AMC, the Independent Film Channel, WE: Women’s Entertainment and regional sports nets, reported net revenues up 19% to $139.8 million with operating income up 50% to $49.7 million.

The company noted penetration progress for both IFC that now reaches 26.8 million subscribers, and WE, which increased its sub base to 43.7 million.

The company stuck by its promise to reach free cash flow in 2004 and its continued efforts to ease its balance sheet through debt reduction. To that end, Cablevision confirmed it had completed the sale of two theaters in the Clearview Cinema chain for approximately $28 million.

On a conference call with analysts, CEO James Dolan refused to provide any further detail on the fate of its foundering Rainbow DBS project, the satellite for which is now slated to launch at the end of August. Dolan said only that Cablevision “will consider all options” and will “take advantage of any strategic opportunities” for the service that come its way.