Cablevision posts 3Q profit after loss a year ago

Cablevision Systems Corp. said Thursday it earned $27.1 million in the third quarter as strong gains in its cable service, programming and Madison Square Garden businesses buoyed results after a loss a year ago. It also said it had suspended plans to sell or spin off assets. Its shares dropped 11 percent.

The Bethpage, N.Y.-based company, which also owns the daily paper Newsday, the AMC cable network and the New York Knicks and Rangers sports teams, had met with major shareholders in August to seek ways to boost its stock price, which included seeking strategic alternatives for assets such as its cable networks.

"In light of these adverse changes in market conditions, we are not actively pursuing any further strategic alternatives at this time," President and Chief Executive Jim Dolan said in a conference call with analysts.

Shares of Cablevision fell $1.86, or 11 percent, to $15.07 in afternoon trading.

Cablevision also quieted some speculation about plans for wireless voice capability, disclosing that the Wi-Fi wireless Internet network it's currently building in the New York metro area could have phone capabilities in the future.

"We see ultimately Wi-Fi evolving into a voice network," said Tom Rutledge, chief operating officer.

In the quarter, the nation's fifth biggest cable operator earned 9 cents per share compared with a loss of $79.3 million, or 27 cents, in the same period a year earlier. The 2007 third-quarter was weighed down by higher charges, such as write-offs and investment and divestiture losses.

Revenue rose 15 percent to $1.74 billion from $1.51 billion a year ago. Analysts polled by Thomson Reuters on average expected a profit of 14 cents per share on revenue of $1.68 billion.

Cablevision, which serves 3.3 million subscribers in the New York area, said operating income rose 39 percent to $281 million.

The company said $1.7 billion in debt is coming due next year, which it can cover with cash on hand, cash flow from operations and financing.

Sanford Bernstein analyst Craig Moffett hailed Cablevision's strong business growth.

"If there's a recession going on in the New York area (where the cable company operates), then Cablevision hasn't gotten the memo yet," he said in a research note.

Customers signed up for 761,200 new lines of service in the quarter, up 8 percent from a year ago. These included existing subscribers buying more services.

Video revenue rose 7.5 percent to $741 million. Cablevision lost 19,100 basic subscribers in the quarter from the second quarter — compared to a 16,000 sequential drop in the third quarter of 2007 — but added 228,800 digital cable TV customers, up 9 percent year-over-year.

High-speed Internet revenue was up 9 percent to $276 million. The cable operator added 207,700 new customers, up 9.4 percent from a year ago.

Voice revenue rose 27 percent to $175 million, with 334,700 new customers, up 22 percent.

Cablevision's Rainbow Media Holdings unit — which owns several cable channels such as AMC, IFC and Sundance — reported a 21 percent increase in revenue to $251.4 million. Strong ratings for the second season of AMC's "Mad Men" helped boost results.

Madison Square Garden revenue rose 10 percent in the quarter to $158.2 million.

Newsday, the newspaper Cablevision purchased in May, posted revenue of $73.5 million and operating income of $4.2 million in the quarter.

Cablevision said it is marketing Newsday through cable TV — customers can buy the paper with a click of the remote control.

"It's a major sales channel for Newsday already," Rutledge said.

The company said it will explore other ways for Newsday and News12, Cablevision's local TV channel, to develop electronic forms of distribution to customers.

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