On Jun 18, 2014, we initiated coverage on Cablevision Systems Corp. (CVC). The company reported strong financial results for the first quarter of 2014 – wherein both the top and the bottom line significantly outpaced the Zacks Consensus Estimate. Cablevision currently has a Zacks Rank #2 (Buy).
Cablevision has undertaken several initiatives to enhance the quality of its video offerings. During the last reported quarter, the company extended its TV to GO services to more than 100 networks. Management has revamped the company’s Spanish language programming and sports and entertainment packages. In Apr 2014, Cablevision strengthened its Multi-Room DVR service which enables customers to record up to 15 programs simultaneously.
In the first quarter of 2014, Cablevision’soverall average monthly cable revenue per customer increased over 6% and average monthly cable revenue per video customer rose 7.7%. Management expects operating cash flow to grow by mid-to-high single digit in 2014.
The U.S. cable TV industry is witnessing massive consolidation. The two major cable TV operators, namely, Comcast Corp. (CMCSA) and Time Warner Cable Inc. (TWC) have decided to merge for which the regulatory approval is pending. Also Charter Communications Inc. (CHTR) has entered into an agreement with Comcast to acquire more than 3 million of the latter’s cable TV customers, post the Comcast-Time Warner cable merger.
Cablevision has not announced any plan of pursuing marger or acquisition in the near future. Management is focusing superior video offerings, increasingly emphasizing on deployment of WiFi network (management has decided to expand this footprint to 1 million by the end of 2014) and providing Ethernet-based triple-play video, voice and Internet connectivity and managed-services to business enterprises.
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