Goldman Sachs downgrades Cablevision; Dolan, Seibert sell stock
Goldman Sachs downgraded Cablevision (NYSE: CVC) stock to a sell rating on Thursday, predicting the MSO's capital spending and stiff competition from Verizon's (NYSE: VZ) FiOS TV will cause its stock to drop by about 20 percent to $11 in the next year.
While most cable and satellite TV providers have hiked subscription fees this year, Cablevision hasn't yet taken a price increase. At the same time, the MSO has increased capital spending to expand its WiFi network and develop new products.
Verizon has been running aggressive promotions targeting Cablevision subscribers, which contributed to Goldman's downgrade. "Verizon is the largest threat, and while the company's FiOS [subscriber additions] have disappointed for the past several quarters, current promotions have returned to prior levels," Goldman wrote in a research note. The firm predicted Verizon will return to adding at least 150,000 net subscribers each quarter, which will impact Cablevision more than any other pay TV provider.
Verizon reported it gained 119,000 FiOS TV subscribers during the third quarter, while Cablevision said it lost 10,000 Optimum video customers during the same period.
Also on Thursday, Cablevision disclosed in Securities and Exchange Commission filings that CEO Jim Dolan sold about $2.4 million in stock and that CFO Gregg Seibert sold about $312,000 in stock.
Dolan exercised 166,666 options to buy Cablevision stock for $6.56 per share on Wednesday, and sold 166,666 Class A shares at an average price of $14.34 per share, Cablevision said in an SEC filing. Seibert sold 22,291 Cablevision Class A shares on Wednesday, which generated $312,504 in proceeds, Cablevision told the SEC.
Cablevision stock was trading at $13.87 at 12:30 p.m. ET on Friday, up 25 cents for the day, or about 1.75 percent.
Special report: Cable in the third quarter of 2012