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RealTime IT News

Digital Data Drives Cablevision's Outlook

Emboldened by higher-than-expected response to its broadband and digital video services, Cablevision Systems is calling for revenue growth of between 12 percent and 14 percent from those business lines in 2003.

Helped in part by close to 170 percent growth in its digital video and VOD subscribers in the fourth quarter, the Bethpage, N.Y.-based Cablevision said it expects its overall cash flow of between 18 percent and 20 percent in 2003.

During year-end quarterly results and discussion of its data services numbers, which one analyst called "astounding," the cable company said high-speed data customers in the fourth quarter totaled 770,125, up 13 percent from the third quarter of 2002.

"The high-speed data product has become a huge success and should continue to drive results forward throughout 2003," wrote Merrill Lynch media analyst Jessica Reif Cohen in a note published soon after the results were released Tuesday.

Although the company lost about 5,300 of its 3 million basic cable subscribers during the period, customers upgrading to digital set-top boxes and digital services more than made up the difference.

Cablevision's digital video subscriber numbers for the quarter blew away most analyst expectations, growing to 216,000 customers by the end of the 2002. That represents 136,000 new digital video customers during the quarter, a growth rate of about 170 percent from the third quarter.

Cablevision's cash flow (earnings before interest, taxes, depreciation and amortization), from its telecommunications division, which includes high-speed data services, video-on-demand products and some telephony products, grew by 19 percent to $252 million. Stronger than expected demand for broadband and VOD services helped drive the growth.

The improved outlook for the year followed the company's fourth quarter results, which included net income of $517.4 million, compared to a net loss of $281.6 million in the same, year-ago quarter.

Revenues were $1.2 billion, up by an estimated 4 percent (using a similar yardstick to compare with the same, year-ago period), the company said.

In addition to better than expected growth in broadband and VOD customers, the results reflected a year of cost-cutting, including laying off over 3,000 employees, selling off its wireless licenses through its Northcoast affiliate, and yesterday's announcement that it would sell off its stake in TheWiz, the consumer electronics retailer struggling to recover from a bankruptcy filing.

The price of set-top boxes has also fallen, company officials noted as another factor helping to improve return on investment in the cost of upgrading cable plants to deliver digital and interactive services to customers.