DBRS Comments on Cablevision’s Strategic Review

DBRS notes today that Cablevision Systems Corporation’s (Cablevision or the Company) recent announcement that its board of directors has authorized management to “explore several strategies for bringing the market value of the Company’s common stock more closely in line with the underlying operating performance of the Company” does not immediately impact DBRS’s current ratings. CSC Holdings, Inc. (CSC Holdings) has a BB (low) Issuer Rating and BBB (low)/BB (high) instrument ratings, while Cablevision’s instrument rating is B. In addition, Rainbow National Services LLC (RNS) has a BB (low) Issuer Rating and BBB (low)/BB (high)/B instrument ratings. DBRS also rates Newsday LLC’s Senior Secured Term Loan BB (high).

Cablevision indicated today that its strategic review will focus on two key initiatives. Firstly, the Company’s board has authorized management to evaluate and establish a policy with respect to quarterly dividends or share repurchases to be initiated in the near term. DBRS noted in its July 23, 2008, rating report that the expectation of good levels of free cash flow in 2008, “should give Cablevision the ability to apply this free cash flow to debt reduction, additional acquisitions or further shareholder-friendly initiatives.”

While at this stage it remains difficult to quantify the magnitude of the Company’s efforts in terms of dividends or share repurchases, a reasonable recurring dividend or share repurchase program should be manageable. However, if either of these efforts ultimately goes beyond DBRS’s expectations (as was the case with the Company’s $3.0 billion leveraged special dividend in 2006), this could affect the Company’s issuer and instrument ratings.

Secondly, the board has authorized management to explore the spin-off of one or more businesses or other potential strategies. This would likely occur over the near to medium term. DBRS notes that if a spin-off of Cablevision’s Rainbow Media business or RNS, for example, were to take place, this would not likely affect the ratings of CSC Holdings, Newsday LLC or Cablevision, as DBRS treats RNS as a separate credit within Cablevision and has only factored the Company’s cable operations as the main cash flow from operations generator for CSC Holdings. However, DBRS notes that at this point it remains difficult to forecast the Company’s strategy (or strategies) as well as assess the impact (if any) on its credit ratings in terms of spin-offs or other strategies.

DBRS will continue to monitor the impact of Cablevision’s strategic review and expects to take further rating action, if necessary, as events unfold. While ultimately the impact of this review may not affect Cablevision’s ratings, DBRS notes that certain actions taken by the Company over the past couple of years have had an impact on the ratings (or would have, had they been successful). This includes the aforementioned special dividend in 2006 and the unsuccessful attempt to privatize the Company via a leveraged buyout in 2007.

Note:
All figures are in U.S. dollars unless otherwise noted.