NEW YORK (Reuters) - Cablevision Systems Corp <CVC.N> on Thursday posted an unexpected quarterly gain in cable subscribers, but its shares fell as it outlined new spending plans on a high-speed wireless Internet network.
By Yinka Adegoke
NEW YORK (Reuters) - Cablevision Systems Corp <CVC.N> on Thursday posted an unexpected quarterly gain in cable subscribers, but its shares fell as it outlined new spending plans on a high-speed wireless Internet network.
Also, the cable operator, run by the Dolan family, has renewed an acquisition push with an agreement to buy the Sundance Channel independent film network and a bid for the Newsday newspaper. Together the deals could cost the company more than $1 billion.
On Thursday, it announced plans to build a wireless broadband network for its New York area subscribers within the next two years at a cost of about $350 million.
!ADVERTISEMENT!Shares in Cablevision fell nearly 3 percent after it announced its wireless plans, although shares have rebounded slightly since. The stock had been trading flat to slightly higher before the news.
But the cable television provider beat most analyst expectations by adding 2,000 basic video subscribers during the first quarter.
Eight analysts polled by Reuters had expected Cablevision to lose an average of 4,000 subscribers as competition from Verizon Communications' <VZ.N> FiOS TV and Internet service made gains in Cablevision's Long Island, New York region.
"Cablevision showed again that it more than holds its own in an increasingly competitive environment," said Chris Marangi, a portfolio manager at Gabelli & Co., a major Cablevision shareholder.
Marangi, who had originally expected Cablevision to lose up to 10,000 subscribers, said he had grown more optimistic after cable rivals like Comcast Corp <CMCSA.O> and Time Warner Cable Inc <TWC.N> posted strong subscriber gains earlier this month.
Cablevision reported a first-quarter net loss of $31.6 million, or 11 cents a share, compared with a net loss of $26.3 million, or 9 cents a share a year ago. The wider net loss was partly caused by a $105 million loss on derivative contracts.
Revenue rose 10.1 percent to $1.721 billion.
Wall Street analysts had on average expected a profit of 2 cents a share on $1.71 billion revenue, according to Reuters Estimates.
RAINBOW MEDIA EXPANDS
Cablevision added 41,000 digital video subscribers and 61,000 high speed Internet subscribers during the quarter. It also added another 93,000 digital phone subscribers.
Bernstein Research had expected Cablevision to add 85,000 digital video subscribers, 38,000 high speed Internet subscribers and 70,000 digital phone subscribers.
Average revenue per subscriber rose 11 percent to $129.56 from the year-ago period.
Cablevision's Rainbow Media unit, which houses cable networks such as AMC and IFC, posted a 16 percent rise in net revenue to $225 million during the quarter.
Rainbow will become home to Robert Redford's Sundance Channel when the transaction closes. Cablevision agreed to pay $496 million in a stock and cash deal to General Electric Co's <GE.N> NBC Universal, CBS Corp <CBS.N> and Redford.
Cablevision has not commented on its potential bid to buy Long Island's Newsday from Tribune Co, but a source familiar with the talks told Reuters it has placed a $650 million bid in competition with Rupert Murdoch's News Corp <NWSa.N>.
On Wednesday Murdoch told journalists he didn't think Cablevision would prevail in its bid for the paper.
Cablevision shares dropped 22 cents to $23.53 after trading as low as $22.96 earlier in the session.
(Reporting by Yinka Adegoke; Editing by Derek Caney)
