Cablevision Systems Corporation (CVC)

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Cablevision Systems (CVC)

Q3 2012 Earnings Call

November 06, 2012 11:00 am ET

Executives

Bret Richter

James L. Dolan - Chief Executive Officer, President, Director, Chairman of Executive Committee and Chairman of Madison Square Garden

Gregg G. Seibert - Chief Financial Officer and Executive Vice President

Kristin A. Dolan - Senior Vice President and Director

Analysts

Marci Ryvicker - Wells Fargo Securities, LLC, Research Division

Douglas D. Mitchelson - Deutsche Bank AG, Research Division

Jason B. Bazinet - Citigroup Inc, Research Division

Craig Moffett - Sanford C. Bernstein & Co., LLC., Research Division

Jessica Reif Cohen - BofA Merrill Lynch, Research Division

Michael McCormack - Nomura Securities Co. Ltd., Research Division

James M. Ratcliffe - Barclays Capital, Research Division

Benjamin Swinburne - Morgan Stanley, Research Division

John C. Hodulik - UBS Investment Bank, Research Division

Thomas W. Eagan - Canaccord Genuity, Research Division

Presentation

Operator

Good morning. My name is Christie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cablevision Q3 2012 Earnings Conference Call. [Operator Instructions]

I would now like to turn the call over to Bret Richter, Senior Vice President, Financial Strategy and Development. Please go ahead, sir.

Bret Richter

Thank you, Christie. Good morning, and welcome to the Cablevision's Third Quarter 2012 Earnings Conference Call. Joining me this morning are Jim Dolan, President and CEO of Cablevision; and Gregg Seibert, Executive Vice President and Chief Financial Officer.

Following a discussion of the company's third quarter 2012 results, we will open the call for questions. If you don't have a copy of today's earnings release, it is available on our website at cablevision.com.

Please take note of the following. Today's discussion may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that any such forward-looking statements are not guarantees of future performance or results, and involve risks and uncertainties that could cause actual results to differ.

Please refer to the company's filings with the Securities and Exchange Commission for a discussion of risks and uncertainties. The company disclaims any obligation to update the forward-looking statements that may be discussed during this call.

Let me point out that on Page 6 of today's earnings release, we provide consolidated operations data and a reconciliation of adjusted operating cash flow, or AOCF, to operating income.

I would now like to introduce Jim Dolan, President and CEO of Cablevision.

James L. Dolan

Thank you, Bret, and good morning. Let me begin this morning by addressing last week's storm.

The storm cut a pathway of destruction up the entire East Coast, and our thoughts and prayers are with everyone who has been affected. In our Optimum East service area, we began our preparations before the storm hit, implementing a thorough response plan that included positioning resources where we believe they would be most needed. Many of the measures that we put in place were in response to lessons learned during Hurricane Irene.

We recently reviewed and revised all of our hurricane response plans and took numerous proactive steps prior to the storm, including deploying emergency staff, testing generators and stocking fuel and securing additional contract labor to assist in the recovery. As soon as it was safe for our people to get into the field, they began responding to service outages and they haven't stopped. However, the loss of electrical power was the primary cause of widespread disruptions of Optimum service, particularly in heavily impacted areas of Long Island, New Jersey, Connecticut and Westchester County. Our crews continue to restore Optimum service as quickly as possible as power returns to our customers.

Our data as of 8:00 a.m. this morning indicates that more than 2.7 million of our Optimum East customers have electrical power and also have their Optimum service, but approximately 535,000 Cablevision households still have no power.

Our Optimum WiFi hotspots have helped many of our customers to stay connected and we currently have approximately 47,000 hot spots operational across the tri-state region. Despite widespread power outages, more than 22,000 of our hotspots were accessible to our customers throughout the storm and during the days immediately following. Restoring service to our customers is our near singular focus right now. However, I realize that the primary purpose of this call is to review our third quarter results, so I'm going to now turn to briefly review the quarter and let Gregg provide some additional detail on our financials.

Despite the impact of seasonally slow -- a seasonally slow quarter in Optimum East, we added nearly 5,000 total Optimum customer relationships company-wide during the third quarter. In addition, we experienced net video subscriber losses that were nearly 50% lower than those experienced in the third quarter of 2011.

Total Optimum Online net additions rose by nearly 70% as compared with the third quarter of 2011. Third quarter net Optimum Voice additions were at a similar level to those achieved during the prior year period, despite a lower contribution from Optimum West.

Our financial performance continues to reflect the near-term impact of the operating and capital investments that we are making. Third quarter 2012 total company revenue grew 1.2% as compared with the third quarter of 2011. AOCF declined 6.6% versus the prior year period, primarily reflecting higher expenses in our core Cable business in the East.

There are a couple of factors that affect the year-over-year comparisons of these results. In the current year's third quarter, we reached a favorable settlement with one of our voice termination partners and in third quarter of 2011, our results reflect the impact of Hurricane Irene. Adjusting for these items, third quarter 2012 total company revenue increased 0.4% and consolidated AOCF declined 11.6% both as compared with the prior year period.

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