On Sep 30, 2014, we issued an updated research report on Cablevision Systems Corp. (CVC).
Cablevision has delivered positive earnings surprises in three quarters last year, with an average beat of 85.48%. The company reported strong financial results for the second quarter of 2014 wherein both the top and the bottom line surpassed the Zacks Consensus Estimate.
Cablevision has undertaken several initiatives to enhance the quality of its video offerings. In the last reported quarter, the company extended its TV to GO services to more than 125 networks. Cablevision is increasingly emphasizing on its WiFi network, called the “Optimum WiFi Network”, for future growth.
The company was the first landline telephone company to introduce high-definition voice service – Litchfield. The service has been initially launched in the Connecticut region. The company has also decided to deploy WiFi-equipped smartrouters for broadband customers. The deployment of smartrouters will convert each customer’s residence into a public WiFi hotspot, which other broadband Internet customers can utilize.
On the flipside, Cablevision is persistently losing video customers. Customer penetration rate for video, high-speed data and voice has also declined on an annual basis. The multi-channel video market in the U.S. is almost saturated. Roughly 87% of the total 114 million TV households in the U.S. are multi-channel TV subscribers. Furthermore, gaining customers from competitors is a difficult task as most pay-TV operators offer innovative packages.
Online video streaming service providers such as Netflix Inc. (NFLX), Hulu.com and Google Inc.’s (GOOG) YouTube have become severe threats to cable TV operators. Online videos provide an extremely cheap source of TV programming unless the customer is eager to view real-time programs like sporting events. This business model is gaining momentum, especially amid volatile economic conditions.
A well performing sector participant worth considering is Comcast Corporation (CMCSK).
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