Cablevision Posts Lukewarm 3Q

Cablevision’s results were a bit mixed as system operation generated a strong quarter of revenue but operating cash flow surprisingly lagged.

For the three months ended September, the cable properties increased revenues by 16% to $910.6 million. Cash flow hit a bit of a speed bump, growing at a slightly lower rate, up 11% to $353.7 million. That's stronger than some other operators, but it also represents an unexpected drop in the system division's cash-flow margin.

The growth seen in the cable systems’ cash flow is due largely to heavy marketing spending (particularly on the company’s telephone product). That spending is reflected in the company’s subscriber counts. High-speed Internet subscribers increased 27% from the same period last year to 1.6 million, while the number of telephone customers tripled to 609,000. The company said it also has signed up 250,000 customers to a tier of HDTV services.

The company’s Rainbow unit suffered because of the collapse of its Chicago sports network and the shutdown of two Metro Channels in New York. The company’s core networks—AMC, WE and IFC—increased revenues 11% to $144 million, while cash flow jumped 15% to $68.5 million. But overall, the unit’s revenues dropped 9% to $211 million, while cash flow increased just 3% to $46.1 million.