We have issued an updated research report on Cablevision Systems Corporation CVC on Apr 8, 2015.
Cablevision reported strong financial results in the fourth quarter of 2014 with both the top and the bottom line surpassing the respective Zacks Consensus Estimate. While ARPU improved significantly, the launch of a high-definition voice service and the Optimum TV app will likely help check subscriber churn.
Cablevision has undertaken several initiatives to enhance the quality of its video offerings. In 2014, the company came up with several new products and upgrades. The company introduced two new Optimum Online speed tiers and also incorporated over 50 networks into the Optimum app to boost the TV to GO video service.
Recently, the company revealed that its broadband customers will now be able to enjoy HBO’s upcoming streaming service – HBO Now. This HBO contract makes Cablevision the first company to strike such a deal with the former. Cablevision’s shares gained 2% on the news. Nearly three million broadband customers will be able to access HBO Now. The service has been strategically launched, matching the time of the season five premiere release of the channel’s blockbuster show – Game of Thrones. We believe that this deal will not only help Cablevision draw more broadband customers but will also drive revenues. We also believe that this service will cater to the young generation who prefer watching TV content online.
On the flip side, in the fourth quarter of 2014, the company lost 34,000 video subscribers, 4,000 high-speed data subscribers and 11,000 voice subscribers. Cablevision is persistently losing video customers despite the implementation of several growth-oriented strategies. Customer penetration rate for video, high-speed data and voice has also declined on an annual basis.
Cablevision currently has a Zacks Rank #3 (Hold).
Stocks to Consider
Better-ranked stocks in this sector include DigitalGlobe, Inc. DGI, EchoStar Corp. SATS and The Walt Disney Company DIS. All these stocks hold a Zacks Rank #2 (Buy).
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