Cablevision earnings up; offload brings $78 mil

NEW YORK — Cablevision Systems Corp. reported Friday an improved earnings performance in the first quarter, and simultaneously announced the $78 million sale of a small cable system in what is likely to be the first of a spate of system sales.

Cablevision said its earnings before interest, taxes, depreciation and amortization — cash flow — rose 10.1% to $122.2 million in the three months to March 31 on 8.8% higher revenue of $358.5 million. The numbers were adjusted to reflect the acquisition of systems in the past year.

Cablevision also said it had signed a deal to offload systems in Maine covering 53,000 subscribers for $78 million to FrontierVision Partners, a group of investors led by JP Morgan and Brown Brothers. Cablevision stock fell 19¢ to $30.81 Friday.

While the deal is tiny by cable standards, it is likely to be the first of many for Cablevision, which committed in February to sell “unclustered” systems covering a total of 475,000 subscribers to raise as much as $700 million-$800 million. Unclustered systems are those which don’t fit into geographic clusters.

Cablevision needs to raise money to reduce its $5 billion debt load, which will rise further as a result of the cabler’s decision to buy ITT Corp.’s 50% stake in Madison Square Garden for $650 million.

Cablevision vice chairman Bill Bell said Friday the cabler had now “listed with brokers” all the systems it targeted to sell and “demand for those assets appears strong,” Bell said.

While Cablevision’s Maine systems sold for less than $1,500 a subscriber — well under the $2,000 a subscriber price seen as a benchmark — people close to Cablevision said such deals are based more on cash-flow multiples. In that sense, Cablevision got “a great price” of more than 10 times cash flow, said one investment banker.

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