Cablevision Systems Corporation (CVC)

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Cablevision Systems Corp. (CVC)

Q4 2008 Earnings Call

February 26, 2009 10:00 am ET


Patricia Armstrong – Senior Vice President Investor Relations

James L. Dolan – Chairman of the Board

Thomas M. Rutledge – Chief Operating Officer

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

Josh Sapan – President and Chief Executive Officer of Rainbow Media

John Bickham – President of Cable & Communications

Gregg Siebert – Executive Vice President


Ingrid Chung – Goldman Sachs

John Hodulik – UBS

Douglas Mitchelson – Deutsche Bank Securities

Tom Egan – Collins Stewart

Craig Moffett – Sanford C. Bernstein

Jason Bazinet – Citigroup

Jessica Reif Cohen – BAS-ML

Jason Bazinet – Citigroup

Matthew Harrigan – Wunderlich Securities, Inc.



Good morning. My name is [Tamika] and I'll be your conference operator today. At this time, I would like to welcome everyone to the Cablevision fourth quarter earnings conference call. (Operator Instructions). I would now like to turn the call over to Pat Armstrong, Senior Vice President, Investor Relations.

Patricia Armstrong

Thank you. Good morning and welcome to Cablevision's Fourth Quarter 2008 Earnings Conference Call. Joining us this morning are members of the Cablevision Executive Team, including Jim Dolan, our President and CEO, Tom Rutledge, Chief Operating Officer, Mike Huseby, Chief Financial Officer, Josh Sapan, President and CEO of Rainbow Media, John Bickham, President of Cable & Communications, and Gregg Siebert, Executive Vice President.

Hank Ratner will not be here today. He's recovering from minor surgery.

Following a discussion of the company's fourth quarter 2008 results, we will open the call for questions. If you don't have a copy of today's earnings release, it's 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 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 during this call. Let me point out that on page six of today's earnings release, we provided consolidated operations data and a reconciliation of adjusted operating cash flow, [abbreviated CF], as operating income.

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

James L. Dolan

Thank you, Pat, and good morning. Cablevision delivered strong results for 2008, despite the economic downturn. For the full year, revenue growth at all three of the company's key business segments, Cable, Rainbow, and MSG, plus the additional Sundance and Newsday, helped drive the company's consolidated revenue for the first time to more than $7 billion.

Meanwhile, full year AOCF grew by 10% to $2.3 billion. Also worth noting for 2008, is that Cablevision generated more than $500 million in free cash flow, which was over three times the free cash flow of 2007.

During the last quarter of 2008, our Cable business remained largely resilient; yet the adverse economy had some impact on other parts of our businesses. Rainbow, even with some ad sales softness in the fourth quarter, still had a good advertising year. MSG Entertainment experienced lighter ticket sales for our winter theme productions during the fourth quarter, and Newsday, with its heavy dependence on advertising, felt the impact as well.

With that said we are pleased with our performance for the year and we'll move forward with strategy to create sustainable, long-term value for our shareholders. For now, that means focusing on maintaining our solid operating performance and growing our businesses. We are moving forward with strategic projects, such as our Wi-Fi build out and our original programming investments at Rainbow. These projects are part of our commitment to providing even better products and services to our customers now and in the future.

We have also taken a number of steps to improve the operating and financial structure of the company. In the latter part of 2008, we announced the closing of Voom's domestic business, restructured parts of our Newsday business, and completed the sales of Life School and Sports School. We expect to see significant savings as a result of these steps.

As for our liquidity and maturity profile, I am pleased to note that we have completed two successful financings already this year, even with the very challenging credit markets. Greg Siebert will talk more about this in a few minutes. And finally, our board of directors has approved another $0.10 per share dividend payable at the end of March.

I would now like to turn the call over to our Chief Operating Officer, Tom Rutledge, who will address our Telecom business, as well as Newsday.

Thomas M. Rutledge

Thank you, Jim and good morning. Overall, our Cable business continued to produce excellent results for the full year, as well as in the fourth quarter of 2008. Cable operations gained 653,000 RGUs in the year, with a 9.1% annual revenue growth and AOCF growth of 10.7%. Customer relationships increased by 8,000 in 2008.

In the fourth quarter, we added 101,000 RGUs, contributing to Cable revenue growth of 7.4% and AOCF growth of 4.1%, compared to the prior year period. AOCF growth was less than in prior quarters due to costs associated with carrying Voom, which was discontinued in mid-January and by softness in the advertising market.

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