RealTime IT News

Cablevision Internet Growth Gets Little Credit

Long Island, N.Y.-based Cablevision Systems Corp. , still in the middle of restructuring its operations, announced Monday strong broadband Internet services growth while continuing to cut down on expenses.

That's good news for the seventh-largest cable network in the nation, which despite garnering 507,000 high-speed customers (which officials say makes them the fastest-growing cable Internet service provider in the nation), was blasted by Wall Street for their lowered digital cable forecast for 2002.

Many analysts attending the conference Monday afternoon focused on the company's digital cable subscriber, which is odd considering adjusted operating cash flow (AOCF) is normally the preferred performance measure used. Cablevision executives reported a 25 percent AOCF increase for the fourth quarter, in line with Wall Street expectations.

Wall Street analysts instead focused on the company's tepid predictions of .5 to one percent overall cable growth and 40,000 to 50,000 digital cable customer growth in 2002.

James Dolan, Cablevision president and chief executive officer, wasn't worried about the year-end numbers and expected continued growth in key divisions.

"While 2001 was a challenging year in many ways, we see 2002 as a year of great opportunity," Dolan said. "Our core businesses continue to perform well and we have taken additional steps to ensure that we are well positioned for this year and beyond. After a thorough, strategic review of our business, we are entering this year with an ambitious plan and a highly capable team that can help propel us to strong operating results."

It's not the start of a good year for Cablevision, which took a $55 million hit last December when it announced the elimination of 600 jobs (four percent of their total employees) and subsequent restructuring. This charge was recorded in its fourth quarter report and is only one of several reasons for the company lowering its expected spending in 2002, from $1.5 billion to $1.3 billion.

The one area the company did well was in its data services, or high-speed Internet, division. Ending the year with more than a half-million customers, Cablevision executives expect to reach 725,000 by the end of 2002.

Gemma Toner, Cablevision senior vice president of high-speed data products, said the revamp to its Optimum Online Web site and customer self-installs helped spur interest in the company's new popularity.

"When we first approached (high-speed Internet services), our message really targeted early adopters, but as we dug deeper into the marketplace, we realized that the speed message really wasn't resonating with the new segment that we were going after," she said. "We needed to dimensionalize, and we did that by creating a campaign that shows people what the speed does for you as opposed to just talking about the speed itself."

Toner said its 17 percent penetration rate among the more than three million overall cable customers made them the fastest-growing cable Internet provider in the nation, and would spur growth well into 2002 and beyond.

Cablevision began selling Internet services in 1999 and serves the New York metropolitan area.

The high-speed Internet division has made great strides in its deployment since then, going from approximately 200,000 high-speed subscribers in 2001 and more than doubling their numbers.