Dolan: No Plans for Asset Sales

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Cablevision Systems Corp. CEO James Dolan offered little insight into his family’s decision to abandon its plan to take the company private, and he would not comment on its pending proposal for a $3 billion dividend for shareholders, but he hinted that the money for that dividend would not likely come from asset sales.

Cablevision’s ruling Dolan family withdrew its $7.9 billion offer to buy the 80% of the Bethpage, N.Y.-based MSO’s common stock it didn’t already own last month.

In conjunction with that announcement, the Dolans recommended that the company issue a $3 billion dividend to all shareholders. Earlier this month, Cablevision’s board of directors gave management the green light to pursue the dividend, which would still require final board approval.

Analysts had speculated that Cablevision could raise the money for the dividend in one of two ways: borrowing it or selling its Rainbow Media Holdings LLC programming assets, including AMC, The Independent Film Channel, WE: Women’s Entertainment and Fuse. In a conference call with analysts to discuss third-quarter results, Dolan all but squashed any hopes of a near-term asset sale.

“We think they are very good businesses. We think they are very valuable,” Dolan said of the Rainbow networks. “Would we consider selling them? You can’t ever rule out a strategic move like that, but at this time, we have no plans to do so.”

For the quarter, Cablevision reported mixed results -- revenue was up 11% to $1.24 billion, but adjusted operating cash flow rose just 3% to $378.6 million. AOCF was impacted by higher expenses at Madison Square Garden and higher advisory fees related to corporate transactions. Those fees were most likely related to the failed attempt to take the company private.

Basic subscribers increased by 3,500, the sixth consecutive quarter of basic-subscriber growth. Cablevision added 101,611 digital-video customers, 80,570 high-speed-Internet subscribers and 122,851 telephone customers in the period.

Average revenue per unit was $96.69 in the period, up $1.47, or 2%, from the second quarter, or 14% ($11.74) from the same period a year ago. Cash-flow margins (cash flow as a percentage of revenue) were also down in the period to 38.8% from 39.4%.

In a research report, Merrill Lynch & Co. Inc. media analyst Jessica Reif Cohen wrote that while disappointing, the cash-flow and margins results were likely caused by the higher advisory fees and “are not indicative of any underlying trends.”

Cablevision stock was up 19 cents each to $25.75 in afternoon trading Tuesday.

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