Cablevision Weighing Interest in Former Bresnan Systems
Cablevision executives said they have received unsolicited bids on the cable systems it acquired from Bresnan and now operates as its Optimum West division. Business at those systems “is going gangbusters,” said Chief Financial Officer Gregg Seibert during a teleconference with analysts Tuesday. “We've had these unsolicited indications. We're going to listen to them, but there is no assurance a transaction is going to take place here.” Cablevision took control of the Bresnan systems in the Western U.S. in December 2010 in a deal valued at about $1.4 billion.
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At its eastern systems, Cablevision’s main goal is to restore service and repair damage in the aftermath of Hurricane Sandy, executives said. “We've been right on the heels of the power company,” turning service back on as soon as possible, Chairman James Dolan said. “I don’t think our customers are seeing a long lag between power coming on and cable service being restored.” As of Tuesday morning, about 535,000 of its customers remained without power, he said.
Some effects of the storm may be longer lasting, as it remains unclear whether some areas hit by the storm will be rebuilt, Dolan said. “We're in constant contact with the power companies and they've told us there are some seaside communities, that at this point, they have no plans to restore power for.” That means some of the homes Cablevision’s network has historically passed may never return, Dolan said. “There will be some,” he said. “We don’t know how many."
It’s too soon to say how the storm will affect Cablevision’s financial or operational plans for the fourth quarter, Seibert said. Lack of power at a Cablevision facility where several of its engineers work could push back by a couple weeks the deployment of its new on-screen guide, executives said. The storm’s damage will exacerbate some of the problems facing Cablevision, Bernstein Research analyst Craig Moffett wrote in a note to investors. “Repairs across Long Island and central New Jersey will be costly and slow, and customers rebates are already being offered for the long stretches customers were without electricity,” he wrote.
Cablevision shares fell 6.3 percent to close at $15.49 Tuesday. They had surged in recent months on the expectation that the company would raise prices, the potential for a sale of the Bresnan systems and its settlement with Dish Network over the Voom litigation, ISI Group analyst Vijay Jayant wrote investors. Cablevision executives were reluctant to discuss the possibility of a rate hike with analysts Tuesday. “In the face of the storm, this may not be as near-term as perhaps some had initially expected,” Wells Fargo’s Marci Ryvicker wrote about a potential cable-price increase.
The company lost 10,000 video subscribers during Q3 and added 28,000 broadband and 22,000 phone customers, it said. It ended the quarter with 3.2 million video, 3 million broadband and 2.4 million phone subscribers. Q3 sales increased 1.2 percent from a year earlier to $1.68 billion. Its net loss was $3.8 million, a swing from a $39 million profit a year earlier. That change was a result of loss on equity derivative contracts.