Stocks: (CVC)(DISH)(DTV)(BBY)(CC)
Cablevision is an interestin company. It is controlled by the Dolan family and they try to buy the company from its public shareholders from time to time. They also decided to borrow $3 billion earlier this year to pay a dividend to owners of the stock. Of course, they did fairly well in the deal.The arrangement upped the company’s debt to well over $12 billion. Cash flow from operations last year was a little over $900 million.
And, Cablevision has its share of competitors. Satellite TV firms DirecTV and Echostar are working retail store chains to sell their products. The more people who buy the products, the fewer who need TV from Cablevision. Best Buy and Circuit City are pushing DirecTV products.
Next in line to take a swing at the Cablevision pinata is Verizon. Its fiber-to-the-home project wil represent an investment of $18 billion when all is said and done. The new service is meant to combat cable company "triple play" options that include voice, TV, and broadband service in one package. For pride alone, Verizon will want to have success in its home market of New York. That would be Cablevision’s home market as well.
And, with its huge debt load, Cablevision does not have a lot of flexibility to fight off competition.
Cablevision’s stock has gone from $19 in April to just under $28 recently. Morgan Stanley recently downgraded the stock, saying that its new products like digital TV and VoIP were approaching saturation levels.
So is the stock.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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