Cablevision Revs Up 10%, MSG Division For Sale

by Wayne Friedman, Jul 30, 2009, 3:35 PM

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Cablevision Systems Corp. will spin off its Madison Square Garden division, which includes the New York building of the same name, the New York Knicks, the New York Rangers and other assets.

That news pushed the company's stock up nearly 9% to $20.49 in mid-day trading. In May, the company told investors it was considering such a move. Cablevision officials also noted that it has no plans to sell any of MSG properties.

The announcement was part of the big New York-area-based cable operator's second-quarter results. The company's net profits slipped 8% to $87 million, with revenue rising 10% to $1.8 billion.

Its basic video business moved down 38,000 consumers or 1.2%, from June 2008. But in its recent trend, digital video consumers continue to climb -- up 113,200, or 4.1% from June 2008.

Cablevision's high-speed Internet business witnessed a 4.5% improvement or 107,500 from June 2008. Its telephone business rose 200,500, or 11.3%, from June 2008.

Revenue per cable customer was at $139.69, up 5.6% from the same quarter a year earlier. Revenue per customer rose 2.3% from the December quarter. Cable television revenue rose 5% over the second quarter of 2008, to $1.3 billion. Cablevision's programming networks -- including AMC, WE tv, and IFC -- showed a slight rise in advertising sales during the period at 2.3%. Josh Sapan, president and CEO of Rainbow Media Holdings LLC, viewed this as a positive, considering the current economic recession and weakened TV advertising market.

Viewing increased 5.7% at WE: Women's Entertainment, 5.2% at Independent Film Channel and 1.4% at AMC in the period versus June 2008. Rainbow networks showed a 9.9% increase in affiliate revenue, and an 8.0% hike in operating costs due to increased programming costs at AMC and WE.

Overall revenue from its cable networks -- including AMC, Independent Film Channel, WE and various regional sports networks -- rose 5.3% from the prior year to $252.3 million, with operating income rising 61.1% to $49 million.

At Madison Square Garden, revenue fell 1% to $207.3 million, and the unit took a loss of $8.4 million. Decreased playoff revenue at MSG Sports and fewer concerts and other entertainment events contributed to the unit's revenue decline.

Cablevision's local advertising business was down 16% year-to-year, but up 34% from the first quarter.

"We are seeing some green shoots," says Tom Rutledge, COO of Cablevision Systems. "Auto advertising has been coming back into the quarter again." He also notes that the rollout of interactive advertising products should see a rise in interactive ad revenues during the next year.

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