05.09.2008 12:00 AM
Cablevision Buys Sundance Channel Despite $104M Derivative Loss
Cablevision subsidiary Rainbow Media Holdings has entered into an agreement to acquire Sundance Channel from General Electric, CBS Corp., and entities controlled by Robert Redford, Cablevision announced.

The next day, Cablevision announced a $104.9 million loss from its derivative investments, the financial instruments based on market movements of various assets.

Sundance Channel, launched in 1996, reaches nearly 30 million subscribers. Rainbow already runs the AMC, IFC and WE tv cable channels.

The deal, subject to conditions and approvals, will be worth $496 million.

Cablevision, which serves 3 million cable customers in the New York area and operates Madison Square Garden and YES, saw consolidated net revenue rise 10.1 percent over the first quarter of last year, to $1.721 billion. But the company still lost $31.6 million (11 cents per share) in the quarter, $5 million more than the first quarter of 2007, thanks to the derivative loss and increases in some operating costs, namely marketing efforts related to the Rainbow Media cable properties.

Cable television net revenue grew 10.5 percent as the company added 197,000 revenue generating units. Basic video subscribers were up 2,000 from December 2007 and down 14,000 (0.4 percent) from a year ago. Television revenue per subscriber hit $129.56, up 3.6 percent from the last quarter and up 10.8 percent ($12.61) from the first quarter of 2007

“Cablevision had a very solid start to 2008 ... fueled largely by continuing growth in the company’s core cable business,” Cablevision President and CEO James L. Dolan said in a statement. “For the first quarter, we added customers across all of our consumer services, including basic video, and became the first cable company to achieve a 50 percent penetration rate for high speed Internet. These results extended Cablevision’s industry-leading penetration rates for yet another quarter while Rainbow and MSG generated strong revenue growth of their own.”

The company is expected to face additional competition in its New York base now that Verizon has reached a key deal with the city to enter that video market.

The company has also launched an effort to acquire the Newsday newspaper, although News Corp.—which already owns the New York Post and Dow Jones Inc.—has entered that competition as well.

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