Cablevision Systems CEO James Dolan said the company is bringing to a halt what he called “repetitive promotions,” adding that the Bethpage, N.Y.-based operator will focus instead on improving the customer experience and connectivity to its products.
That stance along with the continued sluggish economy and competitive pressures led to poor performance on the subscriber front for Cablevision – it shed 37,000 basic video customers, its largest losses since Q4 2012, and lost 13,000 high- speed data and 18,000 phone customers in the quarter, far below analyst expectations.
The Bethpage, N.Y.,MSO has struggled of late to squeeze growth out of its industry leading penetration rates and aggressive competition from telco Verizon Communications' FiOS product.
The declines also led to a 4% dip in adjusted operating cash flow for the company, as revenue increased slightly (1.8%) to $1.6 billion in the period.
“The customer that’s been bouncing from one company to another on promotional discounts has hit a dead-end with us,” Dolan said on a conference call with analysts to discuss third quarter results.”That will have to work itself through the system, certainly during the third quarter but beyond that too.”
On the customer services side, Dolan said Cablevision reduced total call volume by 8% year-over-year, truck rolls were down 28% and repeat trouble calls were down 40% in the same time frame.
The Cablevision CEO also gave his thoughts on the future of the business, which he said would be focused more on data services. Dolan had said earlier in the call that younger customers in particular use more data and less video.
“Having a robust, solid network with great infrastructure behind it that’s ready to handle those products and services, will give you an edge,” Dolan said.
In a research note, ISI Group media analysts Vijay Jayant and David Joyce wrote financial metrics were relatively in line, but the subscriber performance was “troubling.” Other analysts were equally concerned.
“Losing subscribers in all three products is shocking and speaks to either rising competition from Verizon FiOS or worsening product positioning,” wrote Nomura analyst Adam Ilkowitz in a note to clients.
Cablevision stock was down about 5% (77 cents each) to $14.86 in early trading Friday.
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