Cablevision Systems, more than a month after it agreed to a $17.7 billion purchase by European telecom giant Altice, reported its best subscriber performance in three years. But a declining customer base and rising costs helped drive down revenue and cash flow in the third quarter.
Cablevision lost 33,000 basic video subscribers in the period, an improvement over the 56,000 video customers it shed in the same period last year. High-speed data additions of 3,000 were also better than the 26,000 it lost in the prior year. On the telephony front, Cablevision lost 20,000 customers in the most recent period, better than the 33,000 lost in Q3 2014.
But the losses, an increase in programming and legal costs and “unfavorable items” totaling $33.6 million helped drive down adjusted operating cash flow 10% to $423.8 million and revenue down 0.8% to $1.4 billion. Excluding the unfavorable items – for the probable settlement of a pending class action legal matter and for an inventory readjustment – and the deficits would have been reduced to 0.5% on the revenue line and 4.8% for AOCF.
Cablevision agreed to the all-cash Altice deal in September. In announcing the deal Altice said it planned to slash about $900 million in costs from Cablevision, a figure that several analysts called extremely aggressive. At the Goldman Sachs Communacopia conference shortly after the deal was announced, Altice chairman Patrick Drahi said his strategy was to apply European costs structures to Cablevision, including eliminating lofty executive salaries – about 300 Cablevision employees make $300,000 per year or more – and by reducing operating costs.
Cablevision did not hold a conference call to discuss its quarterly results and said it does not intend to hold further calls while the Altice deal is pending.
“The third quarter was highlighted by the announcement of Cablevision’s sale to Altice for $34.90 per share - an acquisition that will deliver significant value for our shareholders,” CEO James Dolan said in a statement. “In the meantime, together with Altice we are moving full speed ahead to obtain the necessary regulatory approvals, while we remain focused on delivering superior products and outstanding service to our customers.”
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