Like most other cable and satellite companies, Cablevision's latest earnings indicate that the NY-based company is slowly leaking TV subscribers. The company lost 56,000 video customers during the third quarter, up from the 37,000 lost by the company during the third quarter last year. Unlike other cable operators who make up for TV losses with broadband and Internet voice subscriber additions, Cablevision lost 23,000 broadband customers and 33,000 Internet voice customers on the quarter as well.
There was a point in time when Cablevision was the cutting edge of broadband speeds, offering tiers unheard of at other ISPs. These days, Cablevision seems fairly content to simply
raise rates right alongside their closer competitor Verizon FiOS, without matching any of Verizon's faster speeds.
Late last year Cablevision management proudly proclaimed that they found competing on price by using promotions to be a "dead end." An analysis of cable bills earlier this year by SNL Kagan indicated that Cablevision customers pay among the highest rates for TV in the nation.
Cablevision boss James Dolan says they're letting deal hunters and credit-challenged customers simply walk to Verizon. Verizon saw a net income of $3.79 billion last quarter, adding 162,000 net new FiOS Internet connections and 114,000 net new FiOS Video customers, but Dolan insists he's not particularly impressed:
quote:
“Verizon, in our opinion, continues on a path of pursuing the destruction of their own capital. We don’t believe that they’re profitable on any level in our service area. They just rabidly pursue us in an attempt to try and get customers. And I think our strategy is actually working quite well because we’re giving them all the customers that we think are the most expensive customers and the ones that provide the least free cash flow to us."
As a result of Cablevision's rate hikes and the drop in meaningful promotions, the company saw their net revenue for the quarter increasing 3.7% to $1.46 billion. That said, they're stuck in an unsustainable vicious cycle. Raising rates on higher-end customers might make stock jocks looking for quarterly growth happy, but it ultimately forces customers to leave for greener pastures or cut back on services. If you were a betting man (or woman), you might wonder if Cablevision's just in a holding pattern before ultimately selling itself to another cable giant, but company CFO Gregg Seibert told attendees of the company's earnings call the company is in it "for the long term." If the rate hikes and disinterest in improving tiers continues, it's not clear if their customers will be.
