Cablevision Systems 3Q profit more than triples

Cablevision Systems Corp. on Tuesday said its third-quarter profit more than tripled as a sluggish economy didn't deter subscribers from signing up for its digital cable, Internet and phone plans in the face of aggressive competition from Verizon's fiber-optic FiOS TV service.

The cable TV operator's Madison Square Garden group, which had been a drag on earnings, made a profit on strong season ticket sales for the New York Knicks basketball team and Rangers hockey team as costs for the group fell. But its Newsday paper lost money, a situation Cablevision hopes to reverse with its move begun last week to charge some customers for online access.

Shares of Cablevision rose 75 cents, or 3.2 percent, to close Tuesday at $24.02.

Cablevision earned $98.9 million, or 33 cents per share, for the period ended Sept. 30. That's up from $30.9 million, or 10 cents per share, a year ago.

Revenue grew 5 percent to $1.84 billion from $1.75 billion in what is typically the slowest quarter of the year for Cablevision, helped by higher cable TV rates.

The results beat the expectations of analysts polled by Thomson Reuters, who forecast profit of 26 cents per share on revenue of $1.82 billion. Analysts' estimates typically exclude one-time items.

Cablevision reported revenue growth of 4.9 percent for its telecommunications services division, which includes cable TV, phone and Internet services.

The number of new digital cable TV customers rose by 2.6 percent from last year, while basic cable TV subscribers fell 1.5 percent. Customers spent an average of $141.03 per month, or 6 percent more than a year ago.

Cablevision signed up 4 percent more new Internet customers and 10 percent more new phone customers. Total phone customers surpassed 2 million for the first time.

Verizon's entry into the New York metro area with FiOS TV hasn't hurt Cablevision yet. FiOS is offered in 36 percent of Cablevision's market, but the expansion has slowed.

"It is expanding less rapidly than it has in prior years ... and therefore their overall competitive impact is somewhat less," Tom Rutledge, Cablevision's chief operating officer, said during a conference call with analysts.

Craig Moffett, senior analyst at Sanford Bernstein, said free Wi-Fi is one reason why Cablevision customers haven't switched to Verizon.

Cablevision provides Wi-Fi access to subscribers at train stations and plans to add the service inside venues such as its Madison Square Garden arena, Radio City Music Hall, malls and airports. It's also bidding to build a Wi-Fi network on New York and New Jersey trains.

"Perhaps it's time to start giving Cablevision's free Wi-Fi network some of the credit," Moffett said in a research note. "For all of its vaunted capabilities in wireless, free wireless broadband is something that Verizon Wireless simply can't match."

The company said its estimated $300 million cost to roll out Wi-Fi is running 15 percent under budget.

At Cablevision's Rainbow division, which includes cable networks such as AMC, WE tv and IFC, and other programming, third-quarter revenue climbed 3.5 percent. Ad revenue rose by 18 percent.

Madison Square Garden's revenue edged up 0.6 percent, while revenue for Newsday rose 9 percent because last year's quarter only included two months of operations due to Cablevision closing its purchase of the paper at the end of July. But Newsday still had an operating loss of $800,000.

The company, based in Bethpage, N.Y., plans to spin off its Madison Square Garden operations.

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