Cablevision Systems Corporation (CVC)

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Cablevision Systems Corporation (CVC)

Q2 2011 Earnings Call

August 9, 2011 10:00 AM ET

Executives

Patricia Armstrong – SVP, IR

Jim Dolan – President and CEO

Thomas Rutledge – COO

Gregg Seibert – EVP, Cablevision Systems Corp.

Analysts

Craig Moffett – Sanford Bernstein

Douglas Mitchelson – Deutsche Bank

Benjamin Swinburne – Morgan Stanley

Jason Bazinet – Citigroup

Thomas Eagan – Collins Stewart

Marci Ryvicker – Wells Fargo

James Ratcliffe – Barclays Capital

Matthew Harrigan – Wunderlich Securities

Richard Greenfield – BTIG

Mike McCormack – Nomura Securities

David Joyce – Miller Tabak & Co.

Bryan Kraft – Evercore Partners

Presentation

Operator

Good morning. My name is Jennifer and I will be your conference operator today. At this time, I would like to welcome everyone to the Second Quarter 2011 Earnings Conference Call for Cablevision. (Operator Instructions)

I will now to turn the conference over to Ms. Pat Armstrong, Senior Vice President of Investor Relations. Please go ahead.

Patricia Armstrong

Thank you. Good morning, and welcome to Cablevision’s second quarter 2011 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; Gregg Seibert, Executive Vice President and Chief Financial Officer, John Bickham, President of Cable and Communications; and Donna Coleman, Senior Vice President Financial Planning And Control.

Following a discussion of the company’s second quarter 2011 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 Web site at cablevision.com.

Please take note of the following. Today’s discussion 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 5 of today’s earnings release, we provide consolidated operations data and a reconciliation of adjusted operating cash flow or AOCF to operating income.

I would now like to introduce Jim Dolan, President and CEO of Cablevision.

Jim Dolan

Thank you, Pat, and good morning.

For the second quarter, Cablevision’s consolidated revenue grew 9% to $1.69 billion and AOCF increased 2.3% to $574 million. These results reflect the addition of Bresnan as well as a one-time favorable programming cost adjustment that occurred in the second quarter of 2010. Without these items, revenue growth would have been 1.5% and AOCF growth would have been essentially flat for the quarter. These results also exclude AMC Networks, which was successfully spun-off in June.

For the first six months of 2011, Cablevision generated $354 million in free cash flow, a 31% increase over the prior year on a pro forma basis. Even without the contribution from Bresnan, free cash flow would have increased by 21%.

The company repurchased more than 4 million shares in the second quarter. In addition, the Board of Directors has once again approved a $0.15 per share dividend payable in September.

With the successful completion of our second spin-off in two years, I’m optimistic about what lies ahead for the new Cablevision. While a weakened economy and competitive pressures impacted our subscriber metrics this quarter, I’m confident that our superior architecture and network combined with our new product innovations will ensure that we continue to deliver better products and greater value for our customers.

We’ve always been focused on a strategy that includes capitalizing on our investments in our cable business and exceeding our customers’ expectations on every level. And as Cablevision’s CEO, I can assure you that the focus has never been stronger than it is now.

I would now like to turn the call over to our Chief Operating Officer, Tom Rutledge.

Thomas Rutledge

Good morning. Thank you, Jim.

Telecommunications revenue for the quarter was $1.6 billion, an increase of 9.8% over the prior-year period. Excluding the impact of the recently acquired Bresnan properties, total revenue growth was 1.7% year-over-year. In the second quarter, our total company results included an increase of 5,000 high-speed data customers, 27,000 new voice lines and a video loss of 23,000.

In the Eastern Cablevision operations, average revenue per sub or RPS was $154.86, up 1.7% sequentially and up 3.8% over the prior-year period. Our rate increase at the end of last year was smaller than normal due to the earlier retransmission issue. Yet RPS has grown steadily, and we are seeding the marketplace with a higher-priced package through our new Ultimate Triple Play, which is priced $10 higher than our standard Triple Play.

Introduced in May, the Ultimate Triple Play already represents over 50% of our new acquisition Triple Play customers. These customers are voluntarily agreeing to higher rates in response to the enhanced services offered in the Ultimate Triple Play package.

In the Eastern Cablevision footprint, our Telecom competition remains active and the economy has seen little improvement. While the second quarter is traditionally a stronger growth quarter for us, these two factors made our growth more challenging, and this trend has continued into the third quarter.

However, our Optimum business service has grown steadily. Optimum Lightpath revenue was $77 million in the quarter, which was an increase of 9% versus the prior year period. Lightpath now provides service to over 4,700 buildings, an increase of 17% over the prior year.

Read the rest of this transcript for free on seekingalpha.com