Cablevision Systems Class A Earnings Call Nuggets: Impact of Sandy and Non-Pay Disconnect Policy

Cablevision Systems Corp Class A (NYSE:CVC) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.

Impact of Sandy

Michael McCormack – Nomura Securities: Just thinking about the Sandy impact and thanks for giving us a little bit more on the guidance front for 2013. I’m assuming that Sandy obviously had an impact on some of the projects that were rolling and just trying to get a sense for the timing on that. How much of an impact goes into 1Q and do you start showing that off in 2Q, maybe primarily on the Onyx guide launch and then secondly on the high-speed data price up, any impact you’re seeing on churn related to that?

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Kristin Dolan – SVP, Product Management: This is Kristin Dolan. On the Onyx rollout, what we did issue that we had there was our testing labs were underwater and unusable for almost three weeks. So, that set us back a little bit, but we are – as they noted on the call, we are all completely deployed on our (Samsung boxes) and we’ll continue with the (SA boxes) within week of today that will be fully deployed across the footprint.

Gregg G. Seibert – EVP and CFO: Mike, in terms of financial impact, the primary financial impact from the storm is very clearly seen in the fourth quarter. We don’t anticipate any follow-on impact as we go into the first quarter of 2013.

Michael McCormack – Nomura Securities: Gregg, I was just trying to figure out. Obviously, 2012 was a year that you guys stated was a year of investment and it sounds like based upon your expectations for AOCF and a lot of it is programming cost driven that ’13 is going to have sort of a continuation of that. How much of that continuation is Sandy related versus just programing cost increases that should have been anticipated I would have assumed?

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James L. Dolan – President and CEO: Mike, this is Jim. The storm clearly set us back with our initiatives about two months, maybe a little less than that. While we had to divert our attention to getting the network back in shape and getting all of our customer relations back in shape, that the – the beginning of the year really we got back to working on the initiatives and advancing them. But I would say basically from the storm through to the end of the year, we lost that time.

Michael McCormack – Nomura Securities: And any impact on the high-speed increase?

Kristin Dolan – SVP, Product Management: Yeah, that was – it’s Kristin again. We got a couple – maybe a handful – a few thousand phone calls on the rate increase. It’s processed through all of our customers already, and less than – and fewer than hundreds of people disconnected, but what gave us an opportunity to do was really to enable our reps to reinforce the value of WiFi. As customers called in, we could tell them how much WiFi they were using and it’s all you can need. Data plans are becoming less and less prevalent. Sprint is the only one that still has them. It gives us actually an opportunity to revalue for customers how important WiFi is for them. So we saw a negligible – like, very, very, very little impact, and as I said, we’ve processed through every customer has received the increase already. So, we’re through it.

Non-Pay Disconnect Policy

Brian Russo – Deutsche Bank: This is Brian Russo for Doug. Just two questions. One is just to clarify the storm impact on subscribers. You gave a lot of information. Part of it was that some customers were unreachable and you also suspended the non-pay disconnect policy, and the total of those things for video, for example, would be 24,000. I just want to make sure I interpreted that correctly. And then the second question is really the programming deal. So, there’s lot of deals that were done in 2013. So, does that kind of imply that your programming cost growth in 2014 and beyond will be lower or more (smooth) or any color on that would be helpful?

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Gregg G. Seibert – EVP and CFO: Brian, I think on the subscriber front, you’re looking at it the right way. The combination of non-paid disconnects and displaced homes was roughly 27,000 on the subscriber side. You’ll see all of that detail in the K in addition to what we’ve presented in the earnings release. We’ve indicated a double-digit increase in programming expenses this year. We entered into a significant number of new agreements or revised agreements last year. So, we’re having a significant impact this year. But I think it’s clear that for video distributors as a whole programing expenses remain a very significant issues and pressure on margin. I would anticipate as we go forward that over time the percentage increase will come down. But it’s still a very difficult issue not only for us but for the industry as a whole.

Brian Russo – Deutsche Bank: So, it’d be fair to say it might be more normalized with the rest of the industry appears to be kind of looking 8% roller beyond when we get past 2013?

Gregg G. Seibert – EVP and CFO: I don’t think you should look at an 8% rate for us next year. I think ours will be higher than that and ultimately, programming costs are going to continue to be an issue.

A Closer Look: Cablevision Systems Earnings Cheat Sheet>>