Shares are down 7.2% in late trading after the company reported that in Q2 it lost broadband subscribers (by 9,000 to 2.78M) as well as video ones (by 28,000 to 2.77M). Cablevision says the declines resulted from heavy discounting by Verizon FiOS which offered triple play services (video, broadband, and phone) for $80 a month. That strategy attracts “customers that are more likely to churn,” CEO James Dolan says. “We believe that our thoughtful approach to pricing will positively impact our long-term results.” He added that Internet service “now is more important than the video product to the consumer.” His company’s build out of more than 1M WiFi hot spots is “a strategic advantage that we have not yet gone out and exploited.” Still, “it is shocking to see what remains of the growth engine of any cable operator in decline,” says MoffettNathanson Research’s Craig Moffett. “Cablevision deserves credit for very effective cost management. What they don’t deserve, however, is a growth company multiple.”
The exhibition company’s up 4.6% after reporting stronger Q2 results than expected in a period when domestic box office fell about 6.5%. Although attendance per screen dropped 3.5%, Carmike’s revenues grew 7.3% in part due to acquisitions. The average ticket outlay increased 2.4% (to $7.39) and concession spending per patron rose 4.1% (to $4.36). Maxim Group’s John Tinker credits the company’s “move into more upscale markets via acquisition” as well as “more favorable terms with concession suppliers.” Hudson Square Research’s Jeffrey Logsdon says he expects a weak Q3 — but that earnings should grow at a double digit pace in 2015 and 2016 due to better “film product, enhancements in food and beverage and alternative content.” CEO David Passman told analysts that Carmike has about 24 liquor licenses, and he’s “hoping we will more than double that in the next 12 to 18 months.”
Another theater owner that exceeded expectations in a weak quarter. Shares are up 2.9% after Cinemark said that its domestic revenue rose 1.4% to $515M while international fell 1% to $197M. Domestic attendance dropped 1%, but average ticket outlays increased (by 4 cents to $7.20) and concession spending per patron was up (17 cents to $3.67). MKM Partners’ Eric Handler says the numbers “exceed expectations across the board.” MoffettNathanson Research’s Robert Fishman adds that “Latin America revenues were much stronger despite [currency exchange rate] headwinds and the World Cup impact.”
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