Friday, November 7, 2014

Should Cablevision Seek A Buyer?

Cablevision announced its third quarter financials and the news suggests trouble.  While revenues rose through price increases, growth has stopped.  Like other cable operators, Cablevision faced another quarter of cable subscriber drops, losing 56,000 households.  The trouble for Cablevision is that while other cable operators see growth in their broadband subscribers, they encountered a drop of 23,000 homes.  That spells major trouble.  Price increases to current homes may mask some concern, leading to Q3 revenue growth of 3.7%,  but continued cable and broadband subscriber drops cannot be overcome with more price increases.  The dam may be ready to burst.

So is there an exit strategy?  Is CEO Jim Dolan still committed to Cablevision or is he willing to finally jettison the asset and concentrate on his main loves, MSG and his music?  Do they have the ability to right this ship? Or is it time for Cablevision to find a buyer?

Cablevision lost a strong leader in Tom Rutledge a few years ago when he left Cablevision to run Charter.  Could Ruttledge be interested in acquiring Cablevision and once again taking control over the troubled empire?  With Comcast and Time Warner Cable busy on their merger plans, Charter could be the likely front runner.  And Rutledge seems to have the Midas touch when it comes to cable operations.  Given Cablevision's stumble, the timing might be right to consider making a bid.  And the answer to the title is yes, Cablevision should start seeking a buyer. 

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