("Cablevision Board Approves MSG Spinoff; 2Q Profit Slips 8.1%,"
published at 8:43 a.m. EDT, misstated the percentage revenue
increased. The corrected version follows.)
DOW JONES NEWSWIRES
Cablevision Systems Corp.'s (CVC) board has approved going ahead
with its plan to spin off its Madison Square Garden and related
assets by year's end as the cable-telelvision company looks to
focus on core operations.
Meanwhile, second-quarter earnings fell 8.1% on hedging losses,
more than offsetting rising sales.
Cablevision also reiterated "it is not considering the sale of
MSG, any of MSG's businesses or any other Cablevision business at
this time."
The company said in May it was reviewing a spinoff of the iconic
arena and related busineses, which include its sports teams - the
New York Rangers and Knicks - and other entertainment venues in New
York City. In subsequently raising Cablevision's credit ratings,
Moody's Investors Service said the move would simplify the
company's business model and reduce volatility in operations and
capital requirements.
Under the proposal, Cablevision holders would get a share of MSG
for each share of Cablevision.
James Dolan would become MSG's chairman and remain Cablevision's
president and chief executive. Hank Ratner would oversee MSG's
day-to-day operations and remain Cablevision's vice chairman.
Dolan said, "The new MSG will be an attractive combination of
sports entertainment and programming properties, while Cablevision
will continue to house a portfolio that includes industry-leading
telecommunications services and popular programming networks. We
believe that the combined value of these assets has not been fully
realized."
The company posted income of $87 million, or 29 cents a share,
down 8.1% from $94.7 million, or 32 cents a share, a year earlier.
The latest results included a $15.9 million loss on derivatives
contracts, while the prior year's included a $65.8 million gain on
the contracts and a much-higher gain on swap contracts.
Revenue increased 9.8% to $1.88 billion.
Analysts polled by Thomson Reuters expected earnings of 29 cents
and revenue of $1.88 billion.
At Cablevision's telecommunications business, by far the
company's largest, revenue rose 5% and earnings grew by 15%, driven
by higher numbers of Internet and voice customers. Basic video
subscribers fell 1.2% from a year earlier and were down 0.3% from
the first quarter. Optimum Online high-speed data customers grew
4.5% and 0.7%, respectively.
At the MSG business, revenue edged down 0.9% as its operating
loss widened. Cablevision's Rainbow unit, which includes cable
channels such as AMC and IFC, posted a 5.3% gain in revenue as
income jumped 61%. Cable networks have been a rare bright spot in
the industry as they are less advertising-dependent.
Cablevision's shares closed Wednesday at $18.93.
-By Kerry Grace Benn, Dow Jones Newswires; 212-416-2353;
kerry.benn@dowjones.com