Dolan: We Like Our Assets

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Cablevision Systems Corp. CEO James Dolan wasn’t saying much about his family’s abandonment of plans to take the company private or about a pending proposal to pay shareholders a $3 billion dividend — but he did hint that cash for it wouldn’t come from asset sales.

Cablevision’s ruling Dolans have withdrawn a $7.9-billion offer to buy the 80% of the Bethpage, N.Y.-based company’s common stock they didn’t already own. They also recommended the company make a $3-billion dividend to all shareholders. Cablevision’s board of directors gave management the green light to pursue the dividend, which would still require final board approval.

TWO WAYS TO GO

Analysts had speculated that Cablevision could raise the money for the dividend in one of two ways: borrow it or sell Rainbow Media Holdings programming assets, such as AMC, the Independent Film Channel, WE: Women’s Entertainment and Fuse.

In a conference call with analysts Nov. 8 to discuss third-quarter results, James Dolan all but squashed speculation about 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.”

In 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. Dragging cash flow: higher expenses at Madison Square Garden and higher advisory fees related to corporate transactions. Those fees were most likely related to the abandoned effort to buy out public shareholders.

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

Average revenue per unit was $96.69 in the period, up 2% ($1.47) from three months earlier and up 14% ($11.74) from the same period a year ago.

The cash-flow margin (cash flow as a percentage of revenue) dipped, to 38.8% from 39.4%.

WI-FI SERVICE HINTS

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

Cablevision chief operating officer Tom Rutledge said on the call the company is looking for other ways to expand into wireless. He said that Cablevision already offers a high-speed wireless-fidelity (Wi-Fi) Internet service on the Port Jefferson-Bridgeport Ferry between Port Jefferson, N.Y., and Bridgeport, Conn., and has entered into agreements with other companies to resell Wi-Fi service, but did not elaborate.

Cablevision spokesman Jim Maiella declined to comment beyond Rutledge’s statement.

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