Cablevision: Broadband & Telephony Up, Pay TV Down

DOCSIS 3.0 broadband continues to attract profitable broadband and telephone subscribers to the cablecos.

Long Island-based Cablevision Systems, which has about 3.3 million pay TV subscribers in a very small geographic footprint, added 25,000 broadband subscribers in its second quarter and 23,000 telephone subscribers. Cablevision has been focusing on selling broadband and telephony to small and medium-sized organizations.

As with other cablecos, Cablevision’s pay TV subscribers declined by 26,000. It’s engaged in a heated rivalry with Verizon.

We have been saying for several years that broadband and telephony are much more profitable than pay TV because the provider doesn’t have any costs for programming. Netflix, iTunes and the other OTT services provide that. The Wall Street Journal agrees, “The broader video [pay TV] business slowdown is leading cable operators [pay TV companies] to invest more in their fast-growing broadband divisions, which also tend to be more lucrative because they aren’t burdened by TV programming costs.

Cablevision made much of its continued investment in its infrastructure for wireline and wireless broadband. It said its goal is to increase broadband speeds and expand Wi-Fi access, which it already offers for free to its subscribers in most of its footprint, plus public access areas in New York City such as commuter train stations. It also provides roaming privileges for its subscribers when they are in the footprints of fellow cablecos Comcast and Time Warner Cable.

High-speed Internet revenue was up 11% with the addition of 29,000 residential Internet customers. Telephone revenue grew 1.8%.

The company said its capital expenditures increased by 38% to $296.4 million during the quarter. CEO James Dolan said increases of that sort could continue for the rest of 2012.

He said Cablevision is working on about 18 different initiatives, including increasing its Wi-Fi access such as on moving commuter trains, a new pay TV user interface and upgrading broadband speeds. He said the company hopes to complete all the projects this year.

“We’re committed to finishing the initiatives because we think that overall they’re very good for the health of the company and customer satisfaction,” he said.

Revenue for the quarter was $1.7 billion and average revenue per user increased 1.7% to a very profitable $155.12.

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