Cablevision Systems Corporation Reports Second Quarter 2013 Results

Cablevision Systems Corporation Reports Second Quarter 2013 Results

BETHPAGE, N.Y.--(BUSINESS WIRE)-- Cablevision Systems Corporation (NYS: CVC) today reported financial results for the second quarter ended June 30, 2013. Please note that in connection with the recent sales of Bresnan Broadband Holdings, LLC (Bresnan Cable) to Charter Communications Operating, LLC and substantially all of Clearview Cinemas (Clearview) to Bow Tie Cinemas, operating results of Bresnan Cable and Clearview are reflected in the Company's consolidated financial statements as discontinued operations for all periods presented.

Second quarter consolidated net revenues increased 0.8% to $1.570 billion, consolidated adjusted operating cash flow ("AOCF")¹ decreased 11.8% to 439.0 million and consolidated operating income decreased 26.3% to $197.8 million, all compared with the prior year period.

Operating highlights for the second quarter 2013 include:

• Sequential Total Company AOCF and operating income growth of 26.2% and 84.2%, respectively, compared with Q1 2013.

• Average Monthly Revenue per Basic Video Customer ("RPS") of $162.42, an increase of $5.49 or 3.5%, compared with the prior year period.

Cablevision President and CEO James L. Dolan said, "Cablevision's pricing and operational initiatives helped drive sequential AOCF growth in the second quarter. We also generated solid growth in our RPS, both sequentially and year-over-year. In addition, we have delivered significant product enhancements, including an across-the-board increase in Internet speeds, our new Multi-Room DVR and our industry-leading Wi-Fi initiatives. These types of advancements are providing an increasingly compelling proposition for new and existing customers."

Telecommunications Services - Cable Television and Lightpath

Telecommunications Services includes Cable Television - Cablevision's video, high-speed data, and voice residential and commercial services offered over its cable infrastructure -- and its "Lightpath" branded commercial data and voice services.

Telecommunications Services net revenues for the second quarter 2013 increased 0.9% to $1.480 billion, AOCF decreased 10.3% to $486.6 million and operating income decreased 18.6% to $270.7 million, all compared with the prior year period.

Cable Television

Cable Television second quarter 2013 net revenues increased 0.9% to $1.402 billion principally due to continued growth of data and voice customers and higher data rates partially offset by lower video revenues and a decrease in advertising revenues, compared to the prior year period. AOCF decreased 11.3% to $450.8 million and operating income decreased 20.0% to $257.3 million, all compared with the prior year period. Second quarter 2013 AOCF results reflect higher operating expenses, primarily programming and employee costs.

The following table illustrates the change in the Cable Television customer base in the New York Metro area during the second quarter of 2013:

Lightpath

For second quarter 2013, Lightpath net revenues increased 1.6% to $82.5 million, AOCF increased 3.8% to $35.8 million and operating income increased 22.4% to $13.5 million, each as compared with the prior year period. Second quarter results reflect an increase in revenue from Ethernet services versus the prior year period.

Other

Other primarily consists of Newsday, News 12 Networks, MSG Varsity, Cablevision Media Sales Corporation and certain other businesses and unallocated corporate costs.

Second quarter 2013 net revenues decreased 1.0% to $94.5 million, AOCF deficit increased by 6.2% to a deficit of $47.5 million and operating loss increased 13.2% to a loss of $73.0 million, all compared with the prior year period. Second quarter results primarily reflect a decline of advertising revenues at Newsday partially offset by lower operating costs.

Other Matters

On July 30, 2013, the Board of Directors of Cablevision declared a quarterly dividend of $0.15 per share on each outstanding share of both its Cablevision NY Group Class A Stock and its Cablevision NY Group Class B Stock. This quarterly dividend is payable on September 5, 2013 to shareholders of record at the close of business on August 15, 2013.

There were no repurchases of stock during the second quarter of 2013. As of June 30, 2013, the Company had approximately $455 million available under its stock repurchase authorizations.

Non-GAAP Financial Measures

We define adjusted operating cash flow ("AOCF"), which is a non-GAAP financial measure, as operating income (loss) before depreciation and amortization (including impairments), excluding share-based compensation expense or benefit and restructuring charges or credits.Because it is based upon operating income (loss), AOCF also excludes interest expense (including cash interest expense) and other non-operating income and expense items.We believe that the exclusion of share-based compensation expense or benefit allows investors to better track the performance of the various operating units of our business without regard to the distortive effects of fluctuating stock prices in the case of stock appreciation rights and, in the case of restricted shares, restricted stock units and stock options, the expense associated with an award that is not expected to be made in cash.

We present AOCF as a measure of our ability to service our debt and make continuing investments, including in our capital infrastructure.We believe AOCF is an appropriate measure for evaluating the operating performance of our business segments and the company on a consolidated basis.AOCF and similar measures with similar titles are common performance measures used by investors, analysts and peers to compare performance in our industry.Internally, we use net revenues and AOCF measures as the most important indicators of our business performance, and evaluate management's effectiveness with specific reference to these indicators.AOCF should be viewed as a supplement to and not a substitute for operating income (loss), net income (loss), cash flows from operating activities, and other measures of performance and/or liquidity presented in accordance with U.S. generally accepted accounting principles ("GAAP").Since AOCF is not a measure of performance calculated in accordance with GAAP, this measure may not be comparable to similar measures with similar titles used by other companies.For a reconciliation of AOCF to operating income (loss), please see page 5 of this release.

We define Consolidated Free Cash Flow from Continuing Operations ("Free Cash Flow"), which is a non-GAAP financial measure, as net cash from operating activities (continuing operations) less capital expenditures (continuing operations), both of which are reported in our Consolidated Statement of Cash Flows.Net cash from operating activities excludes net cash from operating activities of our discontinued operations.We believe the most comparable GAAP financial measure of our liquidity is net cash from operating activities.We believe that Free Cash Flow is useful as an indicator of our overall liquidity, as the amount of Free Cash Flow generated in any period is representative of cash that is available for debt repayment and other discretionary and non-discretionary cash uses.It is also one of several indicators of our ability to make investments and/or return capital to our shareholders. We also believe that Free Cash Flow is one of several benchmarks used by analysts and investors who follow our industry for comparison of our liquidity with other companies in our industry, although our measure of Free Cash Flow may not be directly comparable to similar measures reported by other companies.

COMPANY DESCRIPTION

Cablevision Systems Corporation (NYS: CVC) is one of the nation's leading media and telecommunications companies, delivering its Optimum-branded television, Internet, and voice offerings throughout the New York area. Cablevision's local media properties include News 12 Networks, MSG Varsity and Newsday Media Group. Additional information about Cablevision is available on the Web at www.cablevision.com.

This earnings release may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.Investors are cautioned that any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties, and that actual results or developments may differ materially from those in the forward-looking statements as a result of various factors, including financial community and rating agency perceptions of the company and its business, operations, financial condition and the industries in which it operates and the factors described in the company's filings with the Securities and Exchange Commission, including the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained therein.The company disclaims any obligation to update any forward-looking statements contained herein.

The following is a description of the adjustments to operating income (loss) in arriving at adjusted operating cash flow included in this earnings release:

• Depreciation and amortization (including impairments). This adjustment eliminates depreciation and amortization and impairments of long-lived assets in all periods.

• Restructuring credit (expense). This adjustment eliminates the expense or credit associated with restructuring activities related to the elimination of positions, facility realignment, asset impairments and other related activities in all periods.

• Share-based compensation benefit (expense). This adjustment eliminates the compensation benefit (expense) relating to stock options, stock appreciation rights, restricted stock, and restricted stock units granted under our employee stock plans and non-employee director plans in all periods.