UPDATE 1-Cablevision beats Street on subscriber numbers, shares rise

Feb 26 (Reuters) - Cablevision Systems Corp lost fewer video subscribers than expected in the fourth quarter and said the company expects growth in cash flow in 2014, which sent shares of the cable operator higher on Wednesday.

Cablevision, which is controlled by New York's Dolan Family, said it lost 18,000 video subscribers in the fourth quarter, which was better than the 28,900 video losses that Wall Street was expecting, according to StreetAccount.

"Cablevision is facing fewer customer losses with strong Verizon FiOS competition," said ISI analyst Vijay Jayant.

Cablevision has the largest exposure to Verizon's pay TV service, which has been a major competitive threat to cable companies in recent years.

Cablevision's finance chief Gregg Seibert said on a conference call that the company expects to report high-single digit to low-double digit percentage growth in adjusted operating cash flow, its most closely watched metric.

Cablevision did not provide a full year cash flow forecast but said it expected some cash flow growth in 2014, but not at the same rate of the first quarter.


Executives on the call declined to comment about the recent Comcast -Time Warner Cable proposed $45.2 billion merger that is set to shake up the U.S. cable industry. MoffettResearch analyst Craig Moffett said that deal probably robs Cablevision, a perennial takeover target, of one potential buyer.

To improve its case with regulators, Comcast has said it is willing to sell 3 million subscribers to keep its market share below 30 percent. Cablevision, with a base of about 3 million subscribers, now seems like an unlikely target for Comcast, Moffett said.

"Comcast isn't going to divest subscribers in one transaction to buy them back in another," Moffett said.

Still, Cablevision's foothold in markets such as Long Island in New York and New Jersey would still make it attractive to the cable company that controls New York City.

Revenue rose 4.5 percent to $1.58 billion. Analysts on average were expecting $1.57 billion, according to Thomson Reuters I/B/E/S.

Net income was $51.8 million, or 19 cents per share, down from $116.54 million, or 45 cents a share. A year earlier, the company had higher net income because of discontinued operations such as Bresnan and Clearview Cinemas, two assets Cablevision has since sold.

Adjusted for these discontinued operations and a restructuring credit, EPS was 12 cents per share, which beat Wall Street estimates of 9 cents per share, according to Thomson Reuters estimates.

Cablevision's lower costs helped improve its cable margins. Its fourth-quarter cash flow margin was 32.8 percent, which was up slightly from a year ago.

Cablevision shares rose 85 cents or 5 percent to $17.47.