Cablevision Systems reported financial results for the fourth quarter and full year ended December 31, 2004.
Consolidated fourth quarter net revenues increased 11% to $1.4 billion compared to the prior year period, based on continued strong customer growth in Telecommunications Services as well as advertising and affiliate revenue growth at Rainbow Media’s Core Networks. Consolidated fourth quarter operating loss totaled $279.1 million compared to an operating loss of $46.0 million in the prior year period.
The higher operating loss results from higher DBS operating losses, as well as $354.9 million in non-cash impairment charges at Rainbow DBS to reduce the carrying value of certain assets. Consolidated adjusted operating cash flow for the quarter increased 5% to $261.4 million compared to adjusted operating cash flow of $250.1 million in the prior year period.
The AOCF growth is driven by higher revenue, offset in part by higher DBS operating losses and $108.9 million of non-cash impairment charges at Rainbow DBS (see page 4 for a discussion of the impairment charges). Adjusted operating cash flow (“AOCF”), a non-GAAP financial measure, is defined as operating income (loss) before depreciation and amortization, excluding employee stock plan charges or credits and restructuring charges or credits. Please refer to page 4 for a discussion of our use of AOCF as a non-GAAP financial measure and page 6 for a reconciliation of AOCF to operating income and net loss.
For the full year 2004, consolidated net revenue increased 18% to $4.9 billion, driven by the addition of 1.1 million revenue generating units during the year in Cable Television and revenue growth at Rainbow Media’s Core Networks. Operating loss for 2004 totaled $59.4 million compared to operating income of $31.7 million in 2003, reflecting the Rainbow DBS impairment charges discussed above as well as higher Rainbow DBS operating losses. Full year AOCF rose 15% to $1.3 billion, reflecting the revenue growth, offset in part by higher Rainbow DBS operating losses and the $108.9 million Rainbow DBS impairment charge discussed above. Full year AOCF also includes $106.1 million of one-time payments and credits at Madison Square Garden recorded in the second quarter.
Cablevision President and CEO James L. Dolan commented: “2004 was a remarkable year for Cablevision, highlighted by the extraordinary success we have had in executing our digital strategy. Cablevision is now at the forefront of our industry with leading penetration rates across all of our consumer services – video, digital video, high-speed data and voice. We have also continued to make significant progress in realizing key financial and operational goals, which has resulted in the company meeting or exceeding all of its key guidance objectives for 2004. Moving forward, Cablevision is well positioned to continue reaping the benefits of our operating successes and improved financial position.”
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