NEW YORK — Cablevision Tuesday reported its net losses widened last quarter as some 8,900 basic-cable subs bailed in New York City, and the company said it will restate 2003 earnings to reflect $15 million that were improperly booked at Rainbow Media.
Stock of the New York-area cabler shares closed up 2¢ at $20.45 as losses grew to $105 million in the third quarter from $80 million the year before. Execs said during a conference call that subscribers in New York City left as upgrades to their systems took longer than expected. They promised all system upgrades will be completed by year end and noted the sub count grew in Long Island and New Jersey, where systems have been revamped for high-speed and digital offerings. Company has about 4.7 million cable subs.
Revenue rose 12% to $976 million.
Figures, however, don’t include the effects of a financial restatement that will be announced by the end of this month as the company probes some questionable accounting at its Rainbow Media cable channels. Cablevision let go a number of execs at the unit earlier this year when the irregularities — mostly relating to how expenses were booked — came to light in June.
While $15 million isn’t terribly significant for a company with some $4 billion in annual revenue, Cablevision said more ominously that it is evaluating whether it will need to restate its annual or quarterly results from 2000-2002.
Revs up at cabler nets
Meanwhile, Rainbow’s core cable nets, AMC, IFC, WE: Women’s Entertainment and Consolidated Regional Sports, saw net revenue for the quarter jump 17% to $150 million. Operating income surged 54% to $60 million. Affiliated fees doubled. Combined advertising revenue for AMC and WE more than doubled. The number also includes $8.5 million in receivables from bankrupt Adelphia Communications that previously had been written off.
Cablevision announced in October plans to merge Rainbow with a new satellite service, Voom, and spin off the entity as a separate company called Rainbow DBS.
Voom, which is geared around high-definition television, will offer an exclusive package of 21 high-def channels from Rainbow Media, as well as other cable nets and broadcast channels delivered in either standard definition or high-def when available.
Splitting the cable systems from programming and Voom has intensified speculation that the cable biz could be for sale. Time Warner, which dominates the New York market, would be the likeliest buyer. That conglom’s chairman, Richard Parsons, has said Time Warner will be on the prowl for cable acquisitions starting next year.
Cablevision CEO James Dolan wouldn’t comment on the cabler’s ongoing dispute with the YES Network over Yankees games. “Both parties have filed for arbitration. We will make our best case. … I can only say that we believe in our position. We think it’s the best thing for the customers and the marketplace, and we’re hopeful it will be seen that way.”
Two mediators, former Primedia topper Tom Rogers and former Madison Square Garden prexy Bob Gutkowski, are acting as go-betweens to help soften up the two sides before they enter arbitration, where any ruling is binding.
The dispute is about how much Cablevision should pay to air YES, which wants $2.12 per sub and insists that’s the market rate in New York. Both sides are being hammered by the long-simmering dispute in terms of reputation and revenue. They are said to be very far apart still, although they’ve committed to resolving the issue by the end of March, before the 2004 Yankees season starts.
Cablevision also said its quarterly operating income surged to $24 million from $10.5 million, largely due to easier comps with last year, which included a $72 million restructuring charge. Cash flow grew 4% to $316 million.
The company lowered its full-year 2003 projections for revenue and cash flow.