Ratings agency said co. continues to lose subs, digital limited

NEW YORK — Ratings agency Standard & Poors was unmoved by Cablevision’s recent third-quarter report card and said even its recent disposal of Bravo would not change its rating and negative outlook on the cable-to-sports company.

S&P said Cablevision continued to lose cable TV subscribers due to competition from DBS and its digital subscriber penetration was still very limited at 1.8% (80,300 homes) of its total market. Nine-month results to Sept. 30 showed pro forma operating cash flow up 32% from the same period last year. But concerns about 2003 performance, without some $70 million in earnings from Bravo, have made investors uncertain.

The recent sale of its 80% stake in the cable net to NBC will gross Cablevision anywhere from $328 million to $552 million worth of GE stock, depending on the price of Cablevision stock. But once monetized and taxes paid, the net cash gain could be in the vicinity of $310 million, which will likely be used to pay down debt. The company also secured an extra $75 million through a private preferred investment from Quadrangle Capital Partners.

But none of this was enough to convince S&P that Cablevision will have sufficient funding beyond 2003 under its current financial plans.

“The company’s ability to fully fund its business plan beyond 2003 is largely predicated on its ability to materially grow operating cash flows from its cable businesses during the remainder of 2002 through 2003, including cable modem, digital cable and telephony services,” S&P said in a statement Wednesday.

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