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Cablevision Profit Falls on Cable Nets, Costs

Feb 27, 2007  •  Post A Comment

Cablevision Systems reported a fourth quarter loss because of costs from discontinued operations, lower earnings at its cable networks and its Madison Square Garden unit.

The company lost $23.9 million in the quarter, or 8 cents per share, compared to net income of $64.6 million a year ago, or 0.23 cents. Revenue rose 13 percent to $1.69 billion.

This also compares to its third quarter, when net loss was $59.2 million in the quarter with revenue of $1.4 billion.

Cablevision President and CEO James L. Dolan, who with his father attempted to take the company private earlier this year but was rebuffed, pointed to gains in revenue, cash flow and strong demand for digital video, voice and data services.

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

The company said its basic video customers were up 3.5 percent in the quarter, digital video was up 3.8 percent, voice customers were up 9.9 percent and advertising revenues were up 26 percent. The company said it expects cable revenue to increase at a mid-teen percentage rate next year.

Revenue rose 12.4 percent at Rainbow Media, Cablevision’s programming unit, to $236.7 million. Ad revenue increased 28 percent at AMC, WE and IFC and affiliate revenue rose 4 percent. But Rainbow’s operating income declined because of higher programming costs at its other services, which include Voom, Fuse, regional sports networks and news channels.

For the full year, Cablevision reported a loss of $126.5 million, or 45 cents a share, compared to net income of $89.3 million or 32 cent a year ago.

Craig Moffett, VP and senor analyst at Sanford C. Bernstein, called the company’s growth in its cable services impressive, but noted that the company’s past success will make future growth tough, as will stiffening competition from Verizon.

“Moreover, we remain skeptics of Cablevision’s other businesses,” Mr. Moffett said. “Rainbow’s results, in particular, continue to drag, and we believe their core AMC asset is strategically challenged.”

Mr. Moffett said he did not anticipate a buyer coming forward to purchase Rainbow, which Cablevision is trying to shed. While the sale of the whole company remains a possibility, that prospect is already figured into the stock price, Mr. Moffett said.

Cablevision shares fell 53 cents to $28.47 in trading Tuesday morning.

(Editor: Baumann)