Verizon's FiOS Could Impact Cablevision Buyout Vote - WSJ

Includes: CVC, VZ
by: Steven Towns

The Wall Street Journal reports Verizon's success in attracting customers to its $18 billion TV and faster Internet service, known as FiOS, could be a factor in Wednesday's Cablevision Systems' shareholder vote on the Dolan family buyout offer. In two years since launching FiOS, Verizon has a half a million TV subscribers, and as of Q2, was adding 2,600 subscribers a day. A Banc of America Securities analyst estimates Verizon will have 2M subscribers by 2009, making it the ninth-largest TV provider in the U.S. Analysts and cable company executives have mixed reactions to the success to-date of FiOS, but one sign of strength is Comcast's COO recent acknowledgment that "Verizon is real. [It] is taking video customers from us." Among cable companies, Cablevision is the most vulnerable to Verizon's FiOS roll out, with 25% of its homes serviced already exposed to FiOS, compared to only 4% for Comcast and Time Warner Cable. Cablevision shareholders are set to vote on the controlling Dolan family's $10.6B ($36.26/share) offer to take the company private. The bid has faced increased opposition by large institutional shareholders, who say it widely undervalues the company (full story). Shares of Cablevision Systems gained 0.85% to $31.86 on Tuesday. Verizon rose 1.1% to $44.81.

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