Earnings Preview: Cablevision

OVERVIEW: Cablevision is facing increasing challenges in the first quarter because of growing competition from Verizon Communications Inc., macroeconomic woes and the housing slump.

Cablevision turned in a strong fourth-quarter performance, despite pressure from Verizon's FiOS television offering. Cablevision added slightly to its base of cable TV subscribers as it signed up more customers for high-speed Internet and digital phone services.

Cablevision also owns Madison Square Garden and the New York Knicks, Rangers and Liberty sports teams. The company is proceeding with plans for a $500 million renovation of the sports venue, backing out of a government plan to move into a historic Manhattan post office building. If approved by the city and state, the renovation of Madison Square Garden is expected to start next year and conclude by 2011.

Cablevision also operates Radio City Music Hall and owns and operates Clearview Cinemas.

BY THE NUMBERS: Analysts surveyed by Thomson Financial forecast first-quarter earnings of 2 cents per share on revenue of $1.7 billion.

ANALYST TAKE: Kaufman Bros. analyst Todd Mitchell expects macroeconomic headwinds and increased competition to take a toll on the company. "We believe Cablevision's core cable business will continue to see deteriorating fundamentals, due to already high levels of advanced service penetration and increased competition from Verizon's FiOS," he said.

Deutsche Bank analyst Doug Mitchelson said that while Cablevision faces the toughest FiOS competition, it also has a strong market share and network.

Mitchelson said he will be focused on how Cablevision's cable performance is holding up against FiOS and how the company is deploying its capital. The analyst expressed concern about Chief Executive James Dolan's plans to expand the company through noncore acquisitions.

WHAT'S AHEAD: In May, Cablevision offered $650 million for Long Island newspaper Newsday. Cablevision's offer followed competing bids of $580 million each from Rupert Murdoch's News Corp. and from real estate developer and New York Daily News owner Mortimer Zuckerman.