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02-10-03, 12:44 PM
Merrill Ups Cablevision To Buy;Satellite Sale Seen Likely
DOW JONES NEWSWIRES
No further information is available at this time.
By Ellen Sheng
Of DOW JONES NEWSWIRES
NEW YORK -- Cablevision Systems Corp. (CVC) was upgraded to buy from neutral Monday by Merrill Lynch & Co. analyst Jessica Reif Cohen.
She believes the likelihood of Cablevision launching a new satellite-broadcasting venture has diminished. The scheduled March 8 launch has been delayed two months, giving the company more time to negotiate a sale, Reif Cohen wrote in her note.
Cablevision's satellite plans have been unpopular with many on Wall Street, who want to see the company sell the assets. The cable operator owns a swath of satellite-broadcasting spectrum from Denver to the East Coast and has invested $257 million in the venture so far, plus another $75 million for the required satellite launch this year.
The delay comes at a good time since satellite broadcaster EchoStar Communications Corp. (DISH) will probably be looking to buy additional capacity. Its rival, Hughes Electronics Corp.'s (GMH) DirecTV, recently said that it will expand its offering of local broadcast signals to more than 100 U.S. markets. Cablevision's satellite is configurable with EchoStar's system, the analyst said, estimating the satellite's worth between $350 million to $500 million.
Reif Cohen set a price target of $32 a share on Cablevision. She also raised her estimate of the company's EBITDA (earnings before interest, taxation, depreciation and amortization) to $1.17 billion, up 20% from a year ago.
In addition to the increased likelihood that Cablevision could sell its satellite operations, Reif Cohen also sees a buying opportunity because of recent concern over skyrocketing programming costs.
Cablevision's share price was recently hurt by Time Warner's disclosure that programming costs rose by 16% in the fourth quarter and by 21% for the year.
"We observe that Time Warner's problem is in large part due to the YES Network, where affiliate fees do not cycle through until May 2003. We estimate Cablevision's programming fees are rising by 10% instead of 20% because it declined the YES affiliation," she wrote.
Cablevision has been the industry leader in programming cost containment, she said. Moreover, the company has cut costs by consolidating call centers, instituting a uniform channel lineup and lowering capital expenditure for digital set-top boxes.
Merrill Lynch says that "one or more of the analysts" responsible for covering Cablevision owns shares. Reif Cohen wasn't immediately available to say if she owns shares. Merrill Lynch has received investment-banking compensation from Cablevision in the last 12 months.
Shares of Cablevision recently traded at $16.95, up 70 cents, or 4.3%, on volume of 1.3 million. Average daily volume is 2.7 million shares.
DOW JONES NEWSWIRES
No further information is available at this time.
By Ellen Sheng
Of DOW JONES NEWSWIRES
NEW YORK -- Cablevision Systems Corp. (CVC) was upgraded to buy from neutral Monday by Merrill Lynch & Co. analyst Jessica Reif Cohen.
She believes the likelihood of Cablevision launching a new satellite-broadcasting venture has diminished. The scheduled March 8 launch has been delayed two months, giving the company more time to negotiate a sale, Reif Cohen wrote in her note.
Cablevision's satellite plans have been unpopular with many on Wall Street, who want to see the company sell the assets. The cable operator owns a swath of satellite-broadcasting spectrum from Denver to the East Coast and has invested $257 million in the venture so far, plus another $75 million for the required satellite launch this year.
The delay comes at a good time since satellite broadcaster EchoStar Communications Corp. (DISH) will probably be looking to buy additional capacity. Its rival, Hughes Electronics Corp.'s (GMH) DirecTV, recently said that it will expand its offering of local broadcast signals to more than 100 U.S. markets. Cablevision's satellite is configurable with EchoStar's system, the analyst said, estimating the satellite's worth between $350 million to $500 million.
Reif Cohen set a price target of $32 a share on Cablevision. She also raised her estimate of the company's EBITDA (earnings before interest, taxation, depreciation and amortization) to $1.17 billion, up 20% from a year ago.
In addition to the increased likelihood that Cablevision could sell its satellite operations, Reif Cohen also sees a buying opportunity because of recent concern over skyrocketing programming costs.
Cablevision's share price was recently hurt by Time Warner's disclosure that programming costs rose by 16% in the fourth quarter and by 21% for the year.
"We observe that Time Warner's problem is in large part due to the YES Network, where affiliate fees do not cycle through until May 2003. We estimate Cablevision's programming fees are rising by 10% instead of 20% because it declined the YES affiliation," she wrote.
Cablevision has been the industry leader in programming cost containment, she said. Moreover, the company has cut costs by consolidating call centers, instituting a uniform channel lineup and lowering capital expenditure for digital set-top boxes.
Merrill Lynch says that "one or more of the analysts" responsible for covering Cablevision owns shares. Reif Cohen wasn't immediately available to say if she owns shares. Merrill Lynch has received investment-banking compensation from Cablevision in the last 12 months.
Shares of Cablevision recently traded at $16.95, up 70 cents, or 4.3%, on volume of 1.3 million. Average daily volume is 2.7 million shares.