What Does Billionaire Mario Gabelli See In Cablevision Systems Corporation (CVC)?

Who are its key peers?

Time Warner Inc (NYSE:TWX) is another networking giant that finds a home in Gabelli’s portfolio, with $150mm of GAMCO’s assets devoted to the media company. Time Warner Inc (NYSE:TWX) relies heavily on its cable networks, as those operations account for about 70% of total cash flow. Time Warner Inc (NYSE:TWX) has a much more contained PE of 10, adjusted down after an earnings beat at the beginning of May. Time Warner Inc (NYSE:TWX) actually saw its network’s division revenue climb 3% in that quarter, while Cablevision lost another 5,000 video customers. As an income investment, Time Warner Inc (NYSE:TWX) provides a respectable dividend yield of 1.9%, although still significantly under Cablevision’s yield.

Cablevision also finds competition from satellite cable operators, predominantly in the form of DIRECTV (NASDAQ:DTV) and DISH Network Corp (NASDAQ:DISH).

DIRECTV (NASDAQ:DTV) stands out as GAMCO’s top portfolio position, receiving a $280mm investment from the fund, while his allotment for DISH Network Corp (NASDAQ:DISH) is roughly half of that. DirecTV has not taken a backseat to streaming content stealing subscribers; it has indicated some interest in purchasing Hulu, although KKR and Silver Lake Management have recently put in their own bids. The company began May with an earnings beat, showing revenue that grew 8% compared to the same quarter last year.

Dish did not fair as well, disappointing analysts by over 11% compared to estimates, although it added 66,000 new broadband subscribers and 654,000 new pay-TV subscribers (an improvement year-over-year).

Final thoughts

Although sell-side analysts remain largely neutral on the firm, Gabelli’s significant increase in shares in May show his support when others are fleeing. For example, Buffett has subscribed to this same methodology in the past, and we’ll be watching Cablevision moving forward, in addition to Time Warner Inc (NYSE:TWX), DirecTV and Dish.

Disclosure: none