Cablevision Feels Larry Johnson's Pain

The buyout of Knicks contracts saddles the cable operator with a big charge.
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At least one New York area business has seen business pick up following the Sept. 11 terrorist attacks.

Cablevision Systems

(CVC)

raised estimates for basic cable subscriber growth Tuesday, citing increased demand created by the destruction of the World Trade Center, which housed the broadcast antennas used by most New York-area TV stations.

Reporting financial results for the third quarter ended Sept. 30, Cablevision also said its high-speed data operations would beat year-end targets and its fledgling digital video service would match goals despite a glitch-laden launch. But the company, which operates cable systems comprising 3 million subscribers, Radio City Music Hall and Madison Square Garden, among other businesses, reported a bigger net loss than a year earlier, thanks in part to charges of about $50 million to buy out the contracts of certain New York Knicks.

Cablevision's shares were down 77 cents to $35.65 Tuesday afternoon.

The cable operator, which three months ago cut its forecast for 2001 basic subscriber growth from 1.75% to 1%, raised the forecast to 1.3%, citing the inability of TV users to receive broadcast signals after Sept. 11. After the antennas' destruction, many New York-area broadcasters that had transmitted their signals from the World Trade Center relocated to less-effective transmission spots.

Customers who have lost local signals are evidently turning to cable, though a Cablevision senior VP said fewer than 20% of new customers were signing up for broadcast-only programming. The company is hopeful that the new subscribers will hang on to cable even after broadcast signals are fully restored. "Once people get cable, they find it very difficult to do without it," said Cablevision Vice Chairman William Bell.

Like other cable operators, Cablevision reported strong consumer appetite for high-speed Internet connections, raising its 2001 year-end forecast from 475,000 subscribers to 490,000. The company, which launched a digital video service in September, repeated that it would meet its diminished goal of 40,000 subscribers by year-end despite

a bug-filled start described last month in

TheStreet.com

. "Mr. Murphy has followed me around rather closely on this rollout," commented engineering and technology chief Wilt Hildenbrand.

For the three months ended Sept. 30, Cablevision reported pro forma adjusted operating cash flow, to use the company's terminology, of $151.4 million, down from $193.3 million last year. Those figures assume various acquisitions, sales and other items.

With some onlookers assuming the buyout charge related to ex-Knicks forward Larry Johnson, who retired this fall with a bad back, Cablevision President Jim Dolan was asked whether the NBA team would be buying out contracts of any other injury-plagued players. "The team looks pretty healthy," Dolan said of the squad, which is 2-5 and tied for next-to-last place in its division. "We don't anticipate any more write-offs."

Dolan declined to comment further, saying that he didn't want to give sports reporters a reason to start listening to Cablevision's earnings calls.