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Cablevision Systems (NYSE:CVC)

Q1 2012 Earnings Call

May 03, 2012 10:00 am ET

Executives

Bret Richter -

James L. Dolan - Chief Executive Officer, President, Director, Chairman of Executive Committee and Chairman of Madison Square Garden

Gregg G. Seibert - Chief Financial Officer and Executive Vice President

Wilton J. Hildenbrand - Senior Advisor of Engineering & Technology

Analysts

Jason B. Bazinet - Citigroup Inc, Research Division

Benjamin Swinburne - Morgan Stanley, Research Division

James M. Ratcliffe - Barclays Capital, Research Division

Brian Russo

Craig Moffett - Sanford C. Bernstein & Co., LLC., Research Division

Philip Cusick - JP Morgan Chase & Co, Research Division

Jessica Reif Cohen - BofA Merrill Lynch, Research Division

Michael McCormack - Nomura Securities Co. Ltd., Research Division

Marci Ryvicker - Wells Fargo Securities, LLC, Research Division

Thomas W. Eagan - Canaccord Genuity, Research Division

Bryan D. Kraft - Evercore Partners Inc., Research Division

Operator

Good morning. My name is Christie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cablevision First Quarter 2012 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Bret Richter, Senior Vice President, Financial Strategy and Development. Please go ahead, sir.

Bret Richter

Thank you. Good morning, and welcome to Cablevision's First Quarter 2012 Earnings Conference Call. Joining me this morning are Jim Dolan, President and CEO of Cablevision; and Gregg Seibert, Executive Vice President and Chief Financial Officer. Following the discussion of the company's first quarter 2012 results, we will open the call for questions. If you don't have a copy of today's earnings release, it is available on our website at cablevision.com.

Please take note of the following. Today's discussion may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that any such forward-looking statements are not guarantees of future performance or results, and involve risks and uncertainties that could cause actual results to differ. Please refer to the company's filings with the Securities and Exchange Commission for a discussion of risks and uncertainties. The company disclaims any obligation to update the forward-looking statements that may be discussed on this call.

Let me point out that on Page 5 of today's earnings release, we provide consolidated operations data and a reconciliation of adjusted operating cash flow, or AOCF, to operating income.

I would now like to introduce Jim Dolan, President and CEO of Cablevision.

James L. Dolan

Thank you, Bret, and good morning. During the first quarter of 2012, we made progress on our plans to improve the overall product and service experience to our customers. These plans are changing the way we approach our business and they are positioning the company for long-term success.

As you will recall, during our 2011 fourth quarter earnings call, we explained that 2012 would be a year of investment, in terms of both capital spending and operating execution. Our first quarter 2012 operating metrics reflect the first positive results of these efforts. Many of our key operating statistics reflect significant improvements to recent trends, including an increase in basic subscribers in Optimum East for the quarter.

Admittedly, these achievements did not come without a cost, or more properly stated, an investment. The quarter's financial performance principally reflects the near-term impact of the operating and capital investments that we are in the process of making. Only a portion of this investment took the form of capital expenditures. For example, as most of you are aware, Cablevision has not announced the 2012 rate increase, an action that would typically be reflected in our first quarter revenue. Partly as a result of this decision, first quarter 2012 total revenue was flat as compared with first quarter 2011. AOCF declined 7.6% versus the prior year period, primarily reflecting lower margins in our core cable business.

As we discussed last quarter, we remain focused on striking the right balance between returning capital to our shareholders and investing in the business. As expected, our first quarter results reflect the decision to dedicate more of our resources to our infrastructure and other capital investments. This resulted in a significant year-over-year increase in capital expenditures for the quarter.

After accounting for this increased level of investment and certain movements in working capital that Gregg will discuss in more detail, Cablevision generated approximately $18 million in free cash flow during the quarter. We continue to dedicate a portion of our resources to return of capital initiatives. We repurchased 4.1 million shares of stock in the first quarter. And today, we announced that our board has authorized a $500 million increase in our stock repurchase program. The board also declared a $0.15 per share quarterly dividend, which is payable next month.

Turning to operations. Product -- turning to operations. Product service operational improvements and enhancements continue to progress throughout the business. We completed our data network augmentation project at the end of the first quarter. This investment of over $140 million, which began in mid-2011, has more than doubled our broadband capacity. It also enhanced product performance, and most importantly, it positions our network for future growth.

As you all know, WiFi is an important component of our overall broadband strategy. As of the end of the first quarter, nearly 30% of our Optimum Online customers have utilized our WiFi network, registering more than 1.3 million devices for automatic sign-on. Over 50% of these devices are smartphones, a strong indication that our subscribers recognize the superior speed and value that our Optimum WiFi service provides versus their wireless data plans. Our capital expenditure plans for 2012 include a substantial expansion of our WiFi network. This includes a rollout of additional indoor and outdoor hotspots that will expand both capacity and coverage in geographically targeted areas.

We are also continuing to enhance our mobile TV and TV to GO offerings. The Optimum app for laptops was launched last month, and we are working to expand our Android app to include live TV viewing. Our goal is to enable live television viewing on all the screens within our customers' homes. With our launch of HBO GO and MAX GO in March, we now offer 13 TV to GO products, with more launches planned for the coming months. We continue to work with our programming partners to extend our customers' viewing experience beyond the home because we know that is what they desire, entertainment anywhere, anytime, on the screen of their choice. We plan to continue to evolve our services to meet this demand.

On the content side, we are substantially expanding our Video On Demand titles with plans in place to add titles throughout the year. We are currently testing our new user interface in employee homes, which will not only enhance the ability to search the growing library of titles, but substantially improve the overall Optimum viewing experience. The conversion of our entire network to digital is on track to be completed later this year. This will allow us to roll out our RS-DVR products across our entire footprint, a product that we are continuing to improve as it's deployed.

The digitization of our network is a major strategic step for our company. Not only will this conversion free up tremendous bandwidth throughout our network and enable products, like RS-DVR, it has the potential to improve the way we conduct our business. Simply put, a fully digital network is an intelligent network. It enables a level of communication with and monitoring of network components that we have never had before. It allows us to reconsider how we identify and rectify network issues and outages, and how we respond to and resolve customer problems.

These changes are neither simple nor entirely visible today, but I'm excited by the opportunities we have to make changes in the way we conduct our business and serve our customers. Some changes will come quickly, others are going to take more time, but we expect them all to make a meaningful difference in the experience we provide our customers. And that is our goal, to develop a great relationship with our customers by providing them with the best products and the best service possible.

As we pursue our plans to achieve this goal, there have been changes in our organization. Certain roles have changed, some have expanded, others are no longer needed. As a result, some executives have departed the company, but we've also hired a few senior-level executives who are bringing fresh ideas and renewed energy to our efforts. These types of changes are inevitable as we continue to grow and transform the company.

I have a tremendous confidence in our management team and in our entire organization. I strongly believe that we have the right plan in place to set this company on a path towards long-term success, delivering greater value for our customers and for our shareholders.

And with that, I will now turn the call over to our Chief Financial Officer, Gregg Seibert.

Gregg G. Seibert

Thank you, Jim, and good morning, everyone. In the first quarter, we added over 7,000 video subscribers, including over 4,600 video subscribers in Optimum East, our highest quarterly increase since the second quarter of 2008. We added approximately 42,000 high-speed data customers and 42,000 voice customers company-wide, levels last achieved in the first quarter of 2010.

Average revenue per video customer across all properties was $152.53 in the first quarter, an increase of $2.78 as compared to the prior year period. RPS in Optimum East increased by approximately $2. However, Optimum East RPS declined sequentially. This decline was principally related to seasonally lower first quarter advertising revenue, lower pay-per-view boxing revenue and the impact of certain promotional pricing.

As compared to the prior year, cable revenue for the quarter was essentially flat. Cable revenue was down 0.5% in Optimum East, principally reflecting the year-over-year reduction in video subscribers, the absence of a rate increase and the impact of certain promotional pricing, partially offset by additional data and voice subscribers. In addition, total cable advertising revenue in the first quarter was up 4.1% compared with last year's first quarter, reflecting a 5% increase in Optimum East.

AOCF for the cable business declined by 8.2% overall, declining 9.8% in Optimum East. As Jim mentioned, the decline in Optimum East AOCF principally reflects the modest decline in revenue and the decline in AOCF margin. The principal elements of the margin decline were an increase in programming cost and an increase in certain operating expenses. The first quarter Optimum East AOCF margin was 36.1%, down from 39.8% during the prior year quarter.

Optimum West has continued to make progress. Each of Optimum West's subscriber metrics reflects the highest level of quarterly net additions since the acquisition. Average revenue per sub for the West properties was $135.52 in the first quarter, up over $10 since the first quarter of last year. Revenue was up 7.5% in Optimum West and AOCF increased by 15.8%. The AOCF margin for the West properties was 33.8% in the first quarter.

Total capital spending in the first quarter was $216 million, reflecting a $55 million increase in Optimum East. The increase in first quarter capital expenditures in Optimum East principally reflects investments in our broadband data network, purchases of set-top boxes and other equipment primarily related to the digitization of our cable network, investments in equipment to enhance our ability to monitor our network and investments in a number of software projects. Capital spending for Optimum West was $27.7 million in the quarter, including over $10 million related to our investment in the fiber ring connecting our systems. We expect 2012 quarterly capital expenditures to continue to be significantly higher than during the comparable 2011 period, at least through the third quarter of this year.

At Optimum Lightpath, revenue increased 2.9% as compared to the first quarter of last year. Ethernet revenue grew 11.1% and overall revenue growth was dampened by declines in other revenue. Operating expenses increased 4.6%, principally to support the growth in Ethernet revenues. Overall AOCF increased by 0.7% over the prior year period.

Now turning to the company's financial position. Free cash flow from operations for the 3 months ended March 31 was $18 million, a substantial decline from the prior year period. As Jim noted, this quarter's financial performance reflects a reallocation of resources to internal investments. In addition, first quarter free cash flow was also impacted by a significant change in working capital. The first quarter is typically characterized by a large use of working capital, including cash payments relating to our compensation plans. However, the first quarter of 2012 also included a number of other uses of working capital, including payments relating to certain programming settlements, as well as certain pension and severance payments.

The company's first quarter consolidated cash position was $494 million and net debt was $10.2 billion. We had $1.19 billion undrawn and available under the $1.25 billion revolving credit facility at CSC Holdings. During the quarter, the $159 million undrawn nonextended component of our revolving credit facility matured.

In calculating our total company leverage ratio, annual AOCF is determined using the latest quarter annualized. As a result, at March 31, the company's consolidated net leverage ratio was 5x. The CSC Holdings Restricted Group leverage ratio was 3.7x. At year end, present [ph] net debt was approximately $1 billion with $75 million undrawn and available on its revolving credit facility. The leverage ratio for the quarter was 6.7x, down from the fourth quarter ratio of 6.9x. We continue to be confident that we can manage our operations with this level of debt and we'll continue to monitor our debt levels closely.

Turning to Cablevision's stock repurchase program. In the first quarter, we purchased approximately 4.1 million shares for $59.2 million. From inception of the program through the end of the first quarter, we have repurchased 35.7 million Class A shares, significantly reducing our total outstanding shares by approximately 14%. At March 31, we had $85 million remaining under the program. And as Jim has discussed, our board has authorized a $500 million increase in the program. We currently expect to continue our repurchase program in the current quarter.

Finally, as we execute on our plan to position Cablevision for future success, we have determined that it is an appropriate time to explore potential strategic alternatives for our Clearview Cinemas business. This process is in an early stage. We plan to conduct a thorough review of all potential alternatives.

Operator, we're now prepared to open the call for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Your first question comes from the line of Jason Bazinet of Citi.

Jason B. Bazinet - Citigroup Inc, Research Division

I just have 2 quick questions. A number of investors look at the leverage level and the low rate of top line growth and escalating programming costs, and don't find anything that compelling about your equity. And yet you guys are buying back your stock and reupped your authorizations. I was just wondering if you could -- maybe not so much on the quarter, or even the year, but sort of 1 to 2 years out, what is it that you see on the horizon that you think could inflect for the better? In other words, is it all digital and remote service -- Remote Storage-DVR, lowering CapEx? Is it something on the expense side? Do you think the top line can reaccelerate? And then my second question is on Clearview. If I recall correctly, I think you guys tried to sell this years ago. [Audio Gap] Is that a correct statement? And do you feel like the prospects are fairly good to do something from a strategic standpoint with Clearview?

Gregg G. Seibert

Maybe I can start by answering the Clearview question first, which is, I believe there was a process at one point or another on Clearview prior to my joining the company, which places it at least 3, 4, 5 years in the past. It is not a strategic asset for us. It's an asset that's been helpful in terms of our Optimum Rewards program. But overall, as we're looking for ways to continue to consolidate our business, Clearview is not core by any stretch of the imagination and it's something we're -- I'm hopeful we're going to have a robust process. We're very early in that process and we're just in the beginning stages. So more to come on that in future quarters.

James L. Dolan

And as to your first question, certainly, that we think that the company has a bright future. We've made our statements about this year and our investments that are focused on our customer. But we see things like data usage, WiFi networks, that improve customer experience as providing a bright path for the company. And we think that the stock repurchase program makes sense.

Gregg G. Seibert

And Jason, if I could make one more comment on the repurchase program. We've been clicking along at, call it, roughly 2%, plus or minus, of A shares per quarter for the past several quarters. And in our mind, over time, that has substantial compounding effect on the shareholder. And we're comfortable with that type of a level. It does not affect our leverage materially, when we start with the $10.2 billion number of net leverage, doing an additional $60 million, $70 million or $80 million worth of repurchases in a quarter, really isn't detrimental to leverage.

Operator

Your next question comes from the line of Ben Swinburne of Morgan Stanley.

Benjamin Swinburne - Morgan Stanley, Research Division

Gregg, if I could just ask, could you remind us of any maturities you have ahead of you this year? I think you have some bonds that are callable as well. I don't know if you want to comment on that and just remind us of the overall company cash plus undrawn facility, just so we can get a sense of where we are today on overall liquidity. And then also, I don't know if -- it's been many, many years since I have seen an actual Clearview EBITDA number, I think back to '04. So I don't if you had any, either EBITDA or even just the number of screens you have in Clearview, that would be helpful as well. And maybe lastly for Jim, on cable, a year ago, I think we would have all -- if you had polled people in the industry, you would've said Cablevision's -- one of Cablevision's many clear advantages is the network. It's probably got the best network in the country. And now we're seeing significant investments to that network. And I'm wondering if you think we were incorrect last year in the view of your sort of network advantage in the marketplace and if you think you're going to see an improvement in the EBITDA of the company as a result of these investments sometime in 2012 or this is probably more a 2013 event?

Gregg G. Seibert

Okay, well, Ben, let me start with the amortization. Over the balance of this year, all that we have is term loan amortization, that approximates $70 million. Next year, our amortization is $150 million on the term loans. And the next real maturity of any significance that we have to deal with is the Newsday maturity, which I believe is at the end of July or beginning of August of next year. It's roughly $650 million in size. We have the ability to refinance it at a lower level than $650 million under the partnership agreement that we have with Tribune. And those are our significant maturities over the next 2 years. And I have no present concern about any issues in refinancing those. As I think you were pointing out, our liquidity position is very strong. We have over $400 million worth of cash in the bank as of the end of the last quarter, in fact, closer to $500 million. And most of our $1.25 billion revolver is undrawn, and I don't see any revolver draws coming in the immediate future. So liquidity is quite strong.

Benjamin Swinburne - Morgan Stanley, Research Division

Good. Anything on Clearview?

Gregg G. Seibert

I'm sorry, on Clearview, yes, we have 45 locations for Clearview with a total of 230 screens. And we don't disclose the EBITDA on Clearview, but overall, including corporate allocations, it's a negative number. And that's one of the reasons we're looking at the alternatives for it. We think there are others who can do more with that asset.

James L. Dolan

Right. Ben, this is Jim Dolan. If you're going back a year from now, I think that was right around the same time as the SamKnows study came out, which pegged us at less than 70% of our advertised speeds available on our network. So if you were thinking that we had the best network at that time, I would have to say, you were wrong. But I think our team has done a good job with the upgrade and getting back up to the place where we expect that network to be. And I think the network is absolutely essential to the future of the company and to the growth that we hope we can achieve. So I think we're in much better shape today.

Operator

Your next question comes from the line of James Ratcliffe of Barclays Capital.

James M. Ratcliffe - Barclays Capital, Research Division

Two if I could. First of all, on the subscribers in the quarter, meaningfully improved year-on-year, can you help us understand how much of that was better churn, possibly related to pricing or versus better gross adds? And secondly on the CapEx front, how should we think about that in terms of CapEx might be a pull-in from plans that had been for to do things in 2013 versus incremental spend that hadn't actually been sort of on the books or planned before late last year?

James L. Dolan

Okay. What's the first one?

Gregg G. Seibert

Subscribers. And fine, I'm happy to answer that. I think that in terms of the overall subscriber growth, number one, we're very pleased with that. I think we're one of the few operators, the only operator, that's putting a positive subscriber growth in today's environment. There are a number of factors at play. Certainly, there's reduced sales and there's also reduced churn. And I think what's happening is that a number of our retention efforts are beginning to show their initial success. And as we look forward, we're quite hopeful about being able to continue that type of success. In terms of the capital expenditure side of the equation, we have some projects, which as Jim has pointed out, we needed a network augmentation. When we got the SamKnows data from the FCC, it was really a little bit of a wake-up call in terms of the network. We've now completed that augmentation. Our network is up and efficient in the way that it should be. But as we're looking forward, if you look at quarter-over-quarter changes and where we're spending the capital, it's going into customer premises equipment, which is higher. It's going into support. And additionally, as we get further into the year, it's going to be going into increases on the RS-DVR side and to support the digitization effort. So as you look at 2012, anticipate that our capital expenditures are going up and we're making the investments we need to make in our business.

James L. Dolan

So just to add to that, I think -- so your question was how much of it was accelerated. Some of it was accelerated. The digitization of the entire network was originally planned to take longer. We accelerated that, as well as the planned expansion of broadband capacity for data was a much longer-term project, which we accelerated significantly. But it is, as Gregg said, it's a mixture.

Operator

Your next question comes from the line of Doug Mitchelson of Deutsche Bank.

Brian Russo

This is Brian Russo for Doug. With the launch of more TV Everywhere programming like HBO GO, I was hoping you could give us some perspective on what kind of impact you might be seeing and if you think this could spark more growth in premiums.

James L. Dolan

We just launched that. So I think it's too early to discuss that. Maybe next quarter we'll be able to talk about it.

Operator

Your next question comes from the line of Craig Moffett of Bernstein.

Craig Moffett - Sanford C. Bernstein & Co., LLC., Research Division

Two questions, if I could. Jimmy, I wonder if you could just elaborate a little bit more on the organization and what your vision is now for the organization, given some of the personnel changes that you've had. And then second, what are you seeing in terms of Verizon's construction? They have, under their franchise agreement in New York City, some obligations to continue or to construct all of New York by 2016. Are you still seeing that kind of footprint expansion that you would expect in your New York City properties? Are they largely finished in Long Island? I wonder if you could just give us some more color on that.

James L. Dolan

Okay. Craig, by your first question, I'm going to interpret it to you're asking me what I'm planning on doing. I plan on staying right where I am and in the operating role that I'm in. For some time, I would anticipate it, at least through this year and beyond, and because we have a lot of work to do. And I feel that I need to be right here to do it. And so do not anticipate that I'm going to fill some of those positions that were vacated before. And as far as Verizon is concerned, I mean, we have seen, well, I think everybody else has seen, which is a tailing off of their build plans. Whether they're going to -- what they're going to do with New York City, that would be a prognostication on my part, and I wouldn't do that. But I think we're pretty much seeing what everybody else is seeing in regards to them.

Gregg G. Seibert

One other thing I'd add, Craig, is that on the promotional side, we have seen less promotional pressure in the marketplace this past quarter from a price perspective, so...

Craig Moffett - Sanford C. Bernstein & Co., LLC., Research Division

Specifically from Verizon or from AT&T in Connecticut as well?

James L. Dolan

I haven't seen much of a change in AT&T.

Operator

Your next question comes from the line of Phil Cusick of JPMorgan.

Philip Cusick - JP Morgan Chase & Co, Research Division

Two quick questions. One, on revenue per user. You mentioned last time you spoke that promotional level changes were going to sort of be backing off. And so should we think about the impact in 1Q of those promotions sort of easing off, have a little bit of a tailwind into 2Q revenue per user? And then second, can you talk about the Lightpath business? It seems like growth is decelerating a little bit there. Can we look for increased investment in that business?

Gregg G. Seibert

On the Lightpath side, we had a couple of factors that impacted the quarter. Certainly from a growth perspective, we're looking for growth in the Ethernet side, and that's where revenue grew 11.1%. But for the quarter, both revenue and AOCF growth were negatively impacted by a couple of unusual items, which included a reduction in a reserve for an access revenue dispute in a prior quarter and employee severance and an above-normal level of promotional activity. I would expect that you'll see Lightpath's margins return to much more of a normal level in future quarters.

James L. Dolan

I'm not sure I understand that first question. Do you want to try it again?

Philip Cusick - JP Morgan Chase & Co, Research Division

When you spoke in February, you talked about backing off on some of the aggressive promotions that had been in the market. You just mentioned maybe a little bit of a less aggressive stance from Verizon. And will that help buoy ARPU a little bit in the second quarter versus the first?

James L. Dolan

Well, that would be a forward-looking statement that we probably aren't -- or probably can't do. But I mean, the logic is, if the price is up, that revenue would be associated with that. That's about the best we can do, I think, in terms of that.

Gregg G. Seibert

If I could add that on the last call, what we were highly focused on, was there were analyst reports about $69.95 Triple Play promotions that had been in the market, both on our part and on the part of FiOS. We don't see those promotions in the marketplace at this point in time. That was one of the key points. I think that competition on a base-level promotion is not as intense as it is right now as it has been in the past.

Operator

Your next question comes from the line of Jessica Reif Cohen of Bank of America Merrill Lynch.

Jessica Reif Cohen - BofA Merrill Lynch, Research Division

I have a couple of questions. First, on the expense side, can you give us any color on how much promotion -- how much like marketing grew versus programming expense? And you mentioned program expense growth. Will that be of -- how volatile will that growth number be this year? And then I have a couple more.

Gregg G. Seibert

I'm sorry, Jessica, the second part of that question, how volatile programming expense numbers...

Jessica Reif Cohen - BofA Merrill Lynch, Research Division

Well, I mean, if you could give us some color on first quarter, both how have marketing expenses grew and programming expenses. And then do you have any other contracts coming up this year that will drive that number one way or another?

Gregg G. Seibert

Well, the answer is we always have contracts coming up, and we don't talk about the timing of specific contracts. But at this point, you're certainly seeing the bulk of the pressure on AOCF growth coming from a combination of lowered revenues and higher programming costs. And higher programming costs are with us for the foreseeable future, not only for Cablevision, but for the entire industry. And basically, you'll see in the Q, when it's filed this evening, basically programming costs were up about 8% in the quarter. So that's the big impact.

James L. Dolan

We didn't have any real change in marketing costs, did we?

Gregg G. Seibert

No, marketing costs are pretty much the same.

Jessica Reif Cohen - BofA Merrill Lynch, Research Division

And just a couple more. On the CapEx, I know you mentioned that for the next 2 quarters, it will be up a lot. Should we annualize first quarter? Because if you do, you're well below analyst forecasts for the full year.

James L. Dolan

Well, you know we can't give you that answer.

Jessica Reif Cohen - BofA Merrill Lynch, Research Division

Just trying. Okay, and then just in terms of revenue, Jim, I think you mentioned a new guide is being tested with employees. Can you just talk about what exactly you're doing? And then my final question is, do you have any plans to roll out home monitoring?

James L. Dolan

Okay. Yes. The guide is, I mean, it's something that we've been working on here for multiple years, 3, maybe 4 years. And so we are close to rolling it out and we're testing it currently with our employees. It's highly graphical. It has great search capabilities, indexing capabilities. It's very fast. It's designed to get you to where you want to go in terms of the programming or the product that you want, very quickly. And we think it will compare favorably to any guide that's out there, not just cable or satellite, but even those services like Netflix, et cetera, that this will certainly compare favorably to all of those.

Jessica Reif Cohen - BofA Merrill Lynch, Research Division

Is it cloud-based?

James L. Dolan

Is it cloud -- yes. I'm looking at Wilt. Wilt, you want to give this answer?

Wilton J. Hildenbrand

Yes. We're moving a lot of the guide data into the cloud so that we can store -- have more data available. As you know, the boxes today hold about 7 days worth of data. With DVRs and things like that, we need to have more data than that available. So we're probably going to push it out to over 30 days, and that will be the cloud-based part of it. A lot of it right now is in the set-top. But it's also the basis, if you look at the iPad, iPod and all of the iDevices, if you take a look at the most current release of that, you'll get a sense of what the set-top guide looks like. And those are totally cloud-based, so it's a combination of both.

Jessica Reif Cohen - BofA Merrill Lynch, Research Division

And then on the home monitoring?

James L. Dolan

Right now, we are really focused on our core business and our products in that core business and the relationship with our customers and getting that to where we want it to be. So we do not have any immediate plans for new products like home monitoring. We're going to get this other part absolutely right and where we want it. And after that, we'll be looking at growth opportunities like home monitoring.

Gregg G. Seibert

Jessica, I'm going to elaborate a little bit on the capital expenditure question without giving guidance because we're not going to talk about the Wall Street estimates that are out there. So our capital expenditure program for this year is ramping up. You don't turn things on a dime. And as we've indicated before, capital expenditures this year will be substantially higher than they were last year.

Operator

Your next question comes from Mike McCormack of Nomura Securities.

Michael McCormack - Nomura Securities Co. Ltd., Research Division

Just thinking about the lack of price increase this year, just trying to get a sense for whether it had the desired impact. You talked about less competition from Verizon. But did you also see a churn reduction on a year-over-year basis? And then secondly, with respect to the economy, were you seeing pressure on premiums in VOD?

James L. Dolan

I don't think we break out all of that. But I would have to say that the lack of the rate increase was a contributing factor in our better sub numbers that we've had. But I don't know that we go much deeper than that. And we definitely, Mike -- I don't think we break out premium units either.

Michael McCormack - Nomura Securities Co. Ltd., Research Division

Okay. And Jim, is the price increase off the table for the full year?

James L. Dolan

We're still -- I wouldn't totally rule it out, but it's certainly out for the rest of this quarter.

Operator

Your next question comes from Marci Ryvicker of Wells Fargo.

Marci Ryvicker - Wells Fargo Securities, LLC, Research Division

As we see sub trends reversed, but clearly at a financial cost and looking at the stock today, clearly this is not expected by investors. But just curious if the first quarter trended in line with what you were expecting. So that's my first question. And then secondly, at what point do you think your subscriber trends and your financial trends converge so that maybe we see improvement in both, because I think that's what people are waiting for.

James L. Dolan

Yes, I understand. Well, the first quarter sub results actually were a little better than I thought they were going to be. I didn't think that what we did would have that much of that a significant of an impact, so I'm heartened by that. And when do those numbers converge? That's a very good question. I can tell you that our initiatives, many of them are, take effect in third quarter of this year, some of them into the fourth quarter of this year. They have -- we're hoping that they're going to have a significant impact on growth. Some of them, we think, will have a significant impact on efficiency and how well we do them and how well we conduct our business. But I can't give you an exact date as to when those things all come together to that point that you're talking about.

Operator

Your next question comes from the line of Tom Eagan of Canaccord.

Thomas W. Eagan - Canaccord Genuity, Research Division

I guess I was hoping to ask a previous question kind of in a different way. Is it fair to say, looking out a couple of years that, say, 2012, your strategy is more about increasing customer market share and then looking at 2013, the strategy may be more about the rebalance of the strategy back towards financials?

James L. Dolan

We're certainly hoping that 2012 is the bulk of the extra investment that we're making in our customer initiatives. I can't guarantee it. Some of it has to do with seeing how the customers react. And we certainly would love to be back in that other mode by 2013. But I can't guarantee it. I don't really know for sure, to be honest.

Operator

Our final question comes from Bryan Kraft of Evercore Partners.

Bryan D. Kraft - Evercore Partners Inc., Research Division

I just wanted to ask you on the margins, were there any one-time costs that drove expenses higher in the quarter? Are you pursuing any initiatives to take costs out of the business? And also, can you comment on do you think that this quarter was the low point for EBITDA this year? And then I had a separate question just on the buyback. Just curious, with $85 million remaining, why you chose to reup now. Does it imply that you're going to be more aggressive in buying shares at a faster pace?

Gregg G. Seibert

Yes. I'll take the share repurchase side of the question first. The reason for reupping now is that we continued our purchases into the beginning of this quarter during our window period. And our actual authorization as of today is down to around $70 million. I believe it's best practice to discuss repurchases at the time of earnings calls as opposed to just showing up on a random day with an increase in the authorization. So I think that we are committed to having an authorization in place. It provides us with the flexibility to continue the current program or potentially to reduce the current program or to increase the current program. So it gives management an opportunity, based upon where the stock price is and our views as to leverage, et cetera. So it was just the right time to do it. Normally, in this quarter, we have raised our dividend in the past. The board made a decision this year not to do that. We've spun off AMC with a very substantial amount of AOCF, which is not here [indiscernible] to support a higher dividend. So in effect, there's actually been an effective dividend increase because of the AMC spin. So our balance comes back again to something Jim has talked about a lot on our calls, which is a balance between investing in the business and returning capital to our shareholders. We're trying to be balanced in that regard. But at this point in time, the pendulum has shifted and we're investing in our business. And in terms of the year-over-year one-time costs, it was equal to about 1 point would be the approach. And in terms of cost reductions, we did mention before Clearview. I think we continue to look at our operations, and Jim used a word a few minutes ago, efficiency. And what we are continuing to do is to look for efficiencies in our business, things like truck rolls, the way that we approach our work rules and business rules. But we're not embarking on any type of an organized cost-cutting at this point in time.

Bryan D. Kraft - Evercore Partners Inc., Research Division

Okay. And I mean, can you comment on whether you think the quarter is kind of a low point for EBITDA this year?

Gregg G. Seibert

No. We don't give that type of guidance. And a number of the factors that affected us this quarter are going to continue. Without revenue growth, without substantial revenue growth and with the substantial increases in programming costs that we're seeing, I think you can draw your own conclusion on that. But we're just not going to give specific guidance.

James L. Dolan

Good. Thank you, all.

Operator

Thank you. This does conclude today's Cablevision First Quarter 2012 Earnings Call. You may now disconnect.

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