Cablevision Systems Corporation ( CVC)

Q3 2011 Earnings Call

October 28, 2011 10:00 am ET


Patricia Armstrong – Executive Vice President and Senior Vice President, Investor Relations

James L. Dolan – President and Chief Executive Officer

Thomas M. Rutledge – Chief Operating Officer

Gregg G. Seibert – Chief Financial Officer and Executive Vice President


Jason Bazinet – Citigroup

Phil Cusick – JPMorgan

Douglas Mitchelson – Deutsche Bank

Craig Moffett – Sanford Bernstein

Jessica Reif Cohen – Bank of America/Merrill Lynch

James Ratcliffe – Barclays Capital

Benjamin Swinburne – Morgan Stanley

David Joyce – Miller Tabak & Co.

Thomas Eagan – Collins Stewart

Bryan Kraft – Evercore Partners



Good morning, my name is Melissa and I will be your conference operator today. At this time, I would like to welcome everyone to the Cablevision Third Quarter 2011 Earnings Conference Call. 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) Thank you.

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

Patricia Armstrong

Thank you. Good morning, and welcome to Cablevision’s third quarter 2011 earnings conference call. Joining us this morning are members of the Cablevision Executive Team, including Jim Dolan, 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 third 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 website at

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.

And 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.

James L. Dolan

Thank you, Pat, and good morning. For the third quarter, Cablevision’s consolidated revenue grew 8% to $1.67 billion, while AOCF was essentially flat at $539 million when compared to the prior year period. These results were impacted by Hurricane Irene as well as the addition of the Bresnan property. Without these two times, revenue growth would have been essentially flat and AOCF would have decreased 4% for the quarter.

Cablevision generated $440 million in free cash flow from continuing operations over the last nine months of 5% improvement over 2010. In addition, the company repurchased more than 5 million shares in the third quarter and the Board of Directors has approved the quarterly dividend of $0.15 per share payable in December. The impact of Hurricane Irene resulted in an extensive loss of electricity through significant part of our footprint in the New York metropolitan area.

Cablevision met this challenge well responding to the customers needs and restoring service quickly. Tom is going to talk in more detail about the business and also highlight some positive underlying trends in our performance. These include certain improved subscriber metrics during quarter that has historically been seasonally weak for Cablevision and continued growth at Optimum Lightpath.

Not all of our results in the quarter are where we want them. By many measures, we have built the most successful cable television company in the nation and have set nearly every industry benchmark for sales, customer retention, penetration and financial performance. Continuing to build upon, this historical performance has become more challenging in a highly competitive environment, which is compounded by economic pressures including a significant decline in housing activity. However, we are addressing the challenge and in many ways have been preparing for it for several years.

We have taken pioneering steps to develop products and enhance our services for our customers without straining their wallets. We have sought and identified new markets that offer attractive growth opportunities to which we allocate a portion of our investable capital both Optimum business and Bresnan exemplify this. And as importantly, we have aggressively addressed the financial and capital structure of Cablevision to optimize long-term shareholder returns through the refinancing of our balance sheet, the spin-off of MSG and AMC and the allocation of our investable capital to our quarterly dividend, our stock buyback plan and highly strategic acquisitions.

That said our primary focus is the continued improvement of our product offerings, quality of our services and the provision of the most attractive priced value proposition in the market for our customers.

Historically, Cablevision has confronted the challenges and the constantly evolving business also over multiple business cycles. We are highly confident that the same spirit of service, innovation and execution will guide us as we move forward.

We’d now like to turn the call over to our Chief Operating Officer, Tom Rutledge.

Thomas M. Rutledge

Thank you, Jim and good morning. For the third quarter, Telecom revenue grew by 9% versus the prior year quarter and AOCF was essentially flat. We suffered hurricane damage in the third quarter, which caused us $16 million excluding both the impact of Bresnan and the Hurricane. Telecom AOCF declined by 3.9% in the third quarter over the prior year.

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