Cablevision's Q4 expenses add up

Swings to $23.9 mil loss; cable adds expected to slow

Cablevision Systems swung to a fourth-quarter loss on higher interest expense, and management Tuesday predicted slower cable subscriber growth this year after a record 2006.

In a conference call, president and CEO James Dolan declined comment on the likely future of Cablevision's Rainbow cable channels unit and a potential new bid by the Dolan family that controls the firm to take it private.

He also declined comment on if Rainbow could be sold. Wall Street observers have mentioned Liberty Media and other media and entertainment firms as possible buyers should Rainbow come on the auction block.

Asked if the family could attempt another going-private deal after failing in the past, Dolan said: "I am not talking for the Dolan family today."

Bethpage, N.Y.-based Cablevision reported a loss of $23.9 million, compared with a $64.6 million profit a year ago. Revenue rose 13.4% to $1.7 billion.

In the company's core cable unit, revenue rose 18.6% year-over-year in the latest quarter as Cablevision continued to sign up customers.

The firm added 16,000 basic cable subscribers in the fourth quarter — marking its 11th consecutive quarter of gains. It also signed up 82,000 net digital cable users, 75,000 high-speed cable customers and 109,000 telephony subscribers. Advertising revenue increased 26% for the quarter.

For full-year 2006, Cablevision added 100,000 basic cable subscribers, a 3.3% gain compared with its year-end 2005 base. Overall customer relations grew by more than 1.4 million for the year.

For 2007, the firm projected a 1%-2% gain in basic cable subscribers, the addition of 850,000-950,000 overall new customer relationships, as well as midteen percentage gains in revenue and adjusted operating cash flow in its cable unit.

Capital expenditures should come down to $600 million-$650 million for the year from $777.4 million in 2006.

"For our cable business, 2006 marked the most successful year in the company's history with our largest annual revenue gain ever," Dolan said. "We like our competitive position going forward."

Asked about the slowing subscriber growth outlook for the current year, COO Tom Rutledge cited Cablevision's "extremely high" digital penetration.

Rainbow saw revenue rise 12.4% to $236.7 million in the latest quarter, with operating income declining 21.9% to $19.2 million.

Cablevision's Madison Square Garden unit, which includes arenas and performance spaces as well as sports teams, had essentially flat revenue at $339.6 million, while operating income fell 53.2% to $35.2 million on higher personnel costs at the New York Knicks basketball franchise and other factors.
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