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.