Cablevision Systems (CVC, Financial) is also worried about its declining subscriber base and growing competition from peers. Management is now making efforts to improve its performance. The decline in profits is also a matter of concern for the company. Let us have a look at how Cablevision plans to counter this situation and what strategies is it undertaking to get ahead of its peers?
Recent results
In the recently reported quarter, Cablevision’s revenue increased 3.7% to $1.626 billion. The numbers on the board also beat consensus estimates of $1.610 billion on the revenue. Cablevision also posted operating income of $252.4 million which is more than $225.4 million which it posted in the same quarter last year. Its operating margin also improved to 15.5% which is more than 14.4% in the same quarter last year.
It has undertaken transformational moves under which it is pleased with its ongoing efforts to transform the Optimum experience. Besides this, Cablevision is also focused on improving its products and services. It is operating well with its customer policies to enhance the value of its Optimum’s products and services. These initiatives are expected to reduce the customer churn that the company has been suffering from. In this regard, Cablevision is also undertaking several other initiatives such as transforming service experience, increasing efficiency by reducing transactional activity.
Losing subscribers
But things are not so easy for Cablevision. The company is suffering due to the video subscriber loss. The main reason for the customer running away from the company is low priced bundled TV and internet services from other telecom companies. The main obstacle for Cablevision in this space is Verizon, which is more vibrant and aggressive within its footprint. Besides, some other companies such as AT&T (T, Financial) is also offering bundled telecom and satellite TV services at competitive prices which is eroding Cablevision’s customer base.
However, the company is confident of getting over this weakness as it continues to deliver year-over-year growth in revenue per customer which is a positive sign in this highly competitive environment. Its key priority lies in attracting and retaining high quality customers by differentiating the optimum experience from the competition.
Cablevision is confident that WiFi will prove a key growth driver and Optimum’s most strategic asset as its usage continues to grow. The total WiFi usage has nearly tripled from the last year. The company is pleased to see this progress and is expecting better customer engagement in the days ahead.
The company is also investing in recruitment as it wants to attract, develop and retain the best talent. In fact the company’s efforts in focusing on product and services improvement, proactive customer communication and employee development. These initiatives are helping the company as they are seeing reduction in the customer service activity.
Conclusion
With trailing P/E of 17.68 Cablevision is cheap and the forward P/E of 22.83 on the other hand is showing some good improvement in the earnings for Cablevision. However, in the long term the company might suffer the consequences to declining customer base. Its earnings are declining at a CAGR of -7.94% in next five years.
Cablevision needs to work on and come up with some concrete steps to get over its weakness. Cablevision looks like a weak investment opportunity that should be avoided.
