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Cablevision Poised for Growth on Impending Altice Buyout

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On Jun 1, we issued an updated research report on leading cable MSO (multi service operator) Cablevision System Corp. .

Cablevision reported strong financial results in the first quarter of 2016 wherein both the top and the bottom line outpaced the Zacks Consensus Estimate.

Notably, on Sep 16, 2015, Cablevision and Altice N.V. entered into a definitive agreement pursuant to which Altice has agreed to acquire Cablevision for a total consideration of around $17.7 billion. The deal recently received clearance from the Federal Communications Commission and is expected to close in mid-June.

Cablevision, together with most of the cable TV operators in the U.S., is getting marginalized gradually by the fiber-based video offerings of telecom giants and the online video streaming services of low-cost operators. With competition rising in the pay-TV industry over the last couple of years, Cablevision has been struggling to survive as an independent entity. Therefore, a buyout at this juncture might help resolve a few pressing issues for the company.

Meanwhile, Cablevision recently added Hulu to its Optimum TV offerings. Customers will now be able to enjoy the streaming service on their Optimum TV set-top boxes, making Cablevision the first cable or satellite TV operator to offer Hulu as a pay-TV channel. Notably, Hulu’s subscriptions service has gained commendable market traction despite stiff competition from Netflix, Inc. (NFLX - Free Report) and Amazon.com, Inc. (AMZN - Free Report) .

In the first quarter of 2016, the company lost 15,000 video subscribers and customer penetration rate for video also declined on an annual basis. Thus, we believe Cablevision’s decision to add Hulu services to its channel offerings should attract customers and aid in minimizing its video customer churn.

Additionally, increased Wi-Fi deployment and the continuous launch of innovative products and services like Freewheel should help add customers and boost the top and bottom-line performance.

Cablevision currently carries a Zacks Rank #1 (Strong Buy). Another stock worth considering in this sector is Rogers Communications Inc. (RCI - Free Report) , with the same Zacks Rank as Cablevision.

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