Cablevision sees 1st-qtr profit with cable growth, Newsday revenue; considers Garden spinoff

Cablevision posts profit; explores Garden spinoff

Cablevision Systems Corp. reported a profit for the first quarter Thursday as revenue climbed 11 percent, due to subscriber growth and the addition of the recently acquired Long Island-based newspaper Newsday and the Sundance channel.

Cablevision also said it was exploring the spin-off of one of its most valuable assets, Madison Square Garden. This group includes the namesake New York City arena, the NBA’s New York Knicks and NHL’s New York Rangers as well as Radio City Music Hall.

The move would let investors buy shares of Madison Square Garden separate from the rest of Cablevision.

While Cablevision’s cable TV, high-speed Internet and phone services posted an operating profit, Newsday lost $7.2 million. Cablevision’s chief operating officer, Tom Rutledge, said the company plans to charge customers for online access to Newsday. Other newspapers are considering similar plans, in hopes of reversing steep revenue declines in their print editions.

The company said Newsday — which Cablevision bought last year for $650 million — is not for sale in spite of the newspaper industry slump, and neither is Cablevision’s programming division, Rainbow Media Holdings, which is the home of the channel AMC.

“While we are off to a good start for the year, we remain cautious, given the current economic conditions,” Chief Executive Jim Dolan said in a conference call with analysts.

In the quarter, Cablevision earned $20.2 million, or 7 cents per share, compared with a loss of $31.6 million, or 11 cents, in the same quarter a year earlier.

Revenue was $1.9 billion, up from $1.7 billion. Revenue met the forecast of analysts polled by Thomson Reuters, but the earnings fell short of the expected 15 cents per share.

Free cash flow, a key metric for cable TV operators since they tend to book hefty capital expenditures, more than doubled in the quarter to $170.3 million.

The average monthly revenue per subscriber rose 5.4 percent to $136.55, among the highest in the cable TV industry.

Bethpage, N.Y.-based Cablevision added 540,600 new lines of service, up 5.5 percent from last year. A household taking cable TV, Internet and phone services counts as three lines of service.

It lost 23,100 basic video customers in the quarter from a year ago — a trend seen among several cable operators in past quarters as customers shift to more expensive digital cable. Cablevision signed up 177,500 new digital cable TV subscribers, up 6.7 percent from last year, 141,700 new Internet customers, up 6 percent, and 244,500 new phone subscribers, up 14.5 percent.

Goldman Sachs analyst Ingrid Chung said Cablevision’s subscriber growth rates were lower than expected. Other cable providers, such as Comcast Corp. and Time Warner Cable Inc., reported better-than-expected subscriber results.

Even so, Chung noted that investors were likely pleased by the discussion of a Madison Square Garden spinoff. Cablevision stock rose by $1.01, or 5.5 percent, to $19.34 in midday trading.

Sanford Bernstein analyst Craig Moffett said a Madison Square Garden spin-off would unlock a “treasure trove” for investors.

Cablevision’s revenue for cable TV, Internet and phone services rose 5.3 percent to $1.33 billion in the quarter and operating income was up 14 percent to $294 million. Rainbow’s revenue rose 10.7 percent to $249.3 million and operating income came to $38.8 million, up 40 percent.

The Madison Square Garden group didn’t fare as well, booking an operating loss of $2.2 million even though revenue rose by 2.3 percent to $271.3 million.

Newsday’s operating loss of $7.2 million came on revenue of $83.4 million. There were no comparable revenue and earnings figures from a year ago because Cablevision bought the newspaper from Tribune Co. last July.

Another cable TV company, Charter Communications Inc. posted a first-quarter loss Thursday. Charter, which is controlled by Microsoft co-founder Paul Allen and in Chapter 11 bankruptcy protection, said its loss was lower than last year as it increased its new digital cable TV, Internet and phone customers.

AP Technology Writer Rachel Metz in New York contributed to this article.