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Monday, August 18, 2008

Cablevision's Subscriber Gains Cheer Investors

Cablevision Systems Corp. eased investor concerns by posting quarterly results that showed unexpected subscriber gains at its cable business. Investors also welcomed comments Thursday from Chief Executive James Dolan signaling that the company is weighing a shareholder payout.

Cablevision reported healthy gains in basic and digital video customers for the June quarter, despite fears about a foray into Cablevision's turf by Verizon Communications Inc. with its FiOS TV service. Cablevision, based in Bethpage, N.Y., also continued to add high-speed Internet and phone customers.

In 4 p.m. New York Stock Exchange composite trading, Cablevision shares were up 14%, or $3.03, to $24.28.

Cablevision shares have been pummeled over the last year amid worries about competition from Verizon. Also, investors have become increasingly disenchanted with the Dolans as Cablevision embarked on a spending spree after shareholders rejected the controlling family's offer to take the company private for $10.6 billion last year.

On a conference call Thursday for investors, Mr. Dolan said the company would look for ways to boost its stock price and be more vigilant about shareholder interests. Mr. Dolan said there was a gap between Cablevision's value and the value that the market placed on it.

"We are considering and actively exploring alternatives that may close this gap and want to assure investors we will listen to their thoughts," Mr. Dolan said. His family owns 23% of the company's shares while controlling 74% of its voting power through a class of supervoting shares. Cablevision declined to elaborate on his comment.

Mr. Dolan's comments would seem to "open the door to all options," including a one-time special dividend like the company paid in 2006, regular dividends, share repurchases, asset sales "or even another attempt to take the company private," said Craig Moffett, an analyst at Sanford C. Bernstein.

Cablevision reported net income of $98.3 million, or 33 cents a share, for the second quarter, down from $317.4 million, or $1.08 a share, a year earlier. The year-ago figure was boosted by the company's sale of its stake in a regional sports network. Revenue rose 9.2% to $1.71 billion.

By: Nat Worden and Vishesh Kumar
Wall Street Journal; August 1, 2008