On the Call: Cablevision’s Tom Rutledge

The Associated Press

Cablevision Systems Corp., the nation’s fifth largest cable company, said Wednesday that an October dust-up with News Corp. helped it lose 35,000 basic cable subscribers during the fourth quarter. Cablevision balked at the fees it was paying to re-broadcast News Corp.’s channels, a dispute that left viewers without Fox programming for 15 days and caused sports fans to miss two World Series games. Many of the people who canceled service during the fourth quarter did so because of the blackout, Cablevision said.

In total, the company added a net 271,000 cable customers, but only because it bought Bresnan Communications, which added new customers in Montana, Wyoming, Colorado and Utah to Cablevision’s New York-area operations.

During a conference call to discuss the company’s fourth-quarter results, an analyst asked if this drop in subscribers was mainly a one-time occurrence. Chief operating officer Tom Rutledge responded, saying subscriber retention rates are already trending toward what they were before the dust-up, and that the blackout was worth the inconvenience anyway as it resulted in lower rates.

QUESTION: I wonder if you could detail what kind of impact the Fox re-transmission dispute had quantitatively on the subscriber metrics that you had in the quarter.

RESPONSE (Rutledge): It had an impact in the fourth quarter that was significant. As you know, we were growing (subscriptions) in the first and second quarter, although the economy was still impacting the business in household formation. And that really hasn’t changed. Third quarter, which is our seasonal weakest quarter, we did lose video customers. In the fourth quarter, we think that almost all of the either decreased sales or disconnects result from the retrans fight. And as we look at our data after that, the activity of the business is tracking like it was prior to that issue.

QUESTION: So given that, do you feel like the fourth-quarter numbers are an anomaly then in terms of subscribers, or do you have any change in your optimism about the growth prospects of the business overall?

RESPONSE: I think it is an anomaly directly related to that. It was a decision we had to take. We were faced with a take it or leave it situation on very expensive programming costs. We got significantly lower programming costs as a result of it. … Our assets remain the same. So we thought that taking the hit was worth it. But we thought it was a one-time kind of hit.

Copyright 2011 The Associated Press.