Cablevision Systems Corporation (CVC)

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Cablevision Systems Corporation (CVC)

Q3 2008 Earnings Call

November 6, 2008 10:00 am ET


Patricia Armstrong – Senior Vice President Investor Relations

James L. Dolan – Chairman of the Board

Hank J. Ratner – Vice Chairman of the Management Board

Thomas M. Rutledge – Chief Operating Officer

Michael P. Huseby – Chief Financial Officer & Executive Vice President

Josh Sapan – President and CEO of Rainbow Media

John Bickham – President of Cable & Communications


Ingrid Chung – Goldman Sachs

John Hodulik – UBS

Douglas Mitchelson – Deutsche Bank North America

David Joyce – Miller Tabak

Tom Egan - Collins Stewart

Craig Moffett - Sanford C. Bernstein

Jason Bazinet - Citigroup

Bryan Goldberg - J.P. Morgan

Benjamin Swinburne - Morgan Stanley

Jessica Reif Cohen - Merrill Lynch

Analyst for Vijay Jayant - Barclays Capital



My name is Raquel and I will be your conference operator today. At this time I would like to welcome everyone to the third quarter conference call for Cablevision. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question and answer session. (Operator Instructions) I would now like to turn the conference over to the Senior VP of Investor Relations, Ms. Pat Armstrong.

Patricia Armstrong

Welcome to Cablevision’s third quarter 2008 earnings conference call. Joining us this morning are members of the Cablevision executive team including Jim Dolan, our President and CEO, Hank Ratner, Vice Chairman, Tom Rutledge, Chief Operating Officer, Mike Huseby, Chief Financial Officer, Josh Sapan, President and CEO of Rainbow Media and John Bickham, President of Cable and Communications.

Following a discussion of the company’s third quarter 2008 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 This call can also be accessed via our website.

Please take note of the following: this discussion of Cablevision’s results 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 & Exchange Commission for a discussion of risks and uncertainties. The company disclaims any obligation to update the forward looking statements that may be discussed during this call. Let me point out that on page 5 of today’s earnings release we provided consolidated operations data and a reconciliation of adjusted operating cash flow or AOCF to operating income.

I will now turn the call over to Cablevision’s President and CEO, Jim Dolan.

James L. Dolan

For the third quarter Cablevision’s consolidated revenue increased more than 15% to $1.7 billion as compared to the prior year period. This was driven by strong revenue growth in all three of our major business segments, cable, Rainbow and Madison Square Garden and includes the incremental impact of the Sundance and Newsday business.

Cablevision’s AOCF for the third quarter increased 16% over the prior period to $575 million. These results for the combined businesses are very encouraging especially in light of the current economic environment. During our second quarter earnings call at the end of July we talked about our desire to better align the market value of Cablevision’s common stock with the company’s underlying operating performance.

Shortly thereafter Cablevision’s board of directors authorized the company’s management to begin exploring potential strategic alternatives for achieving this goal. Since then we have spent substantial time and resources looking at various alternatives that could unlock this value. In August we declared a quarterly dividend of $0.10 per share and yesterday our board of directors approved another $0.10 per share dividend payable in December.

As you are all aware, since we began this process the capital market conditions and the overall economy have deteriorated. In light of these adverse changes in market conditions we are not actively pursuing any further strategic alternatives at this time and we are focusing on maintaining strong operating performance. Of course, we remain open to considering any compelling opportunities that may arise such as asset sales and stock repurchases.

We will also consider ways to preserve our liquidity without impeding the growth of our core businesses. Lastly, I want to mention that over the past three months we’ve received valuable feedback from our shareholders, we appreciate your support and look forward to actively continuing the dialog. I would now like to turn the call over to our chief operating officer Tom Rutledge.

Thomas M. Rutledge

Overall our cable television business continues to have solid results in the third quarter of 2008. The company gained approximately 96,000 RGUs in the quarter contributing to cable revenue growth of 9.8% and AOCF growth of 13.6% compared to the prior year period. Our average monthly revenue per subscriber was $133.11 for the third quarter, up $0.82 over the second quarter of ’08 and up $12.20 over the last year’s third quarter.

Cable capital spending totaled $208 million for the third quarter. Customer premises equipment was lower than the prior year reflecting fewer RGU adds while capital dedicated to the WiFi and wideband projects was approximately $22 million. Year-to-date we spent $521 million in capital, an increase of 11% over last year’s comparable period. Adjusted for the WiFi and wideband spend year-to-date capital spending was essentially flat with last year’s spending levels and, as a percentage of revenue, even including WiFi and wideband capital spending is flat as well.

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