PRESS RELEASE: Fitch: Cablevision Sale Good For Cred Prof
January 21, 2005 15:07 ET (20:07 GMT)
Fitch Ratings-Chicago-January 21, 2005: In Fitch Ratings' view, the decision by Cablevision Systems Corporation and CSC Holdings, Inc. (CSC) to sell Rainbow 1 and to exit the direct broadcast satellite business removes a significant overhang from CSC's credit profile and positions the company to focus on its core cable business. Fitch believes that the Rainbow DBS business model struggled to become a viable business and in the absence of a spin-off presented material business and financial risk to CSC's credit profile. Fitch currently rates CSC's senior unsecured debt 'BB-', the senior subordinated debentures 'B+', and the senior secured bank facility 'BB+'. All of the ratings have a Stable Rating Outlook.
During 2004, Fitch estimates that Rainbow DBS cash-funding requirements approached $500 million and believes that the business would have been a significant cash drain for the foreseeable future. Additionally, the decision to exit the DBS business alleviates the company from funding the construction and launch of the five Ka band satellites and two Ku band satellites. Fitch believes the funding requirement associated with these satellites would have been in excess of $2.0 billion.
The company indicated that the closing date for the transaction with Echostar cannot be determined, as the sale is subject to regulatory approvals. It is expected that Rainbow DBS will continue to operate the business during the transition period. The cash costs to exit the DBS business, including satellite construction contract termination penalties and lease termination costs have yet to be determined; however, Fitch points out that Rainbow Media Enterprises, Inc., the parent company of Rainbow DBS, had a cash balance pro forma for the financing completed in August of approximately $661.2 million. Fitch believes that Rainbow Media Enterprises liquidity is sufficient to fund the exit of the DBS business.
Cablevision Systems Corporation and CSC Holdings, Inc. announced that the companies have entered into an agreement to sell its direct broadcast satellite, Rainbow 1, and related assets, including an earth station and certain FCC licenses to Echostar Communications Corporation for $200 million in cash. This decision follows the companies' earlier decision to suspend efforts to spin off Rainbow Media Enterprises, Inc. to Cablevision shareholders.
Contact: David Peterson +1-312-368-3177 or Michael Weaver +1-312-368-3156, Chicago.
Media Relations: Brian Bertsch +1-212-908-0549, New York
January 21, 2005 15:07 ET (20:07 GMT)
Fitch Ratings-Chicago-January 21, 2005: In Fitch Ratings' view, the decision by Cablevision Systems Corporation and CSC Holdings, Inc. (CSC) to sell Rainbow 1 and to exit the direct broadcast satellite business removes a significant overhang from CSC's credit profile and positions the company to focus on its core cable business. Fitch believes that the Rainbow DBS business model struggled to become a viable business and in the absence of a spin-off presented material business and financial risk to CSC's credit profile. Fitch currently rates CSC's senior unsecured debt 'BB-', the senior subordinated debentures 'B+', and the senior secured bank facility 'BB+'. All of the ratings have a Stable Rating Outlook.
During 2004, Fitch estimates that Rainbow DBS cash-funding requirements approached $500 million and believes that the business would have been a significant cash drain for the foreseeable future. Additionally, the decision to exit the DBS business alleviates the company from funding the construction and launch of the five Ka band satellites and two Ku band satellites. Fitch believes the funding requirement associated with these satellites would have been in excess of $2.0 billion.
The company indicated that the closing date for the transaction with Echostar cannot be determined, as the sale is subject to regulatory approvals. It is expected that Rainbow DBS will continue to operate the business during the transition period. The cash costs to exit the DBS business, including satellite construction contract termination penalties and lease termination costs have yet to be determined; however, Fitch points out that Rainbow Media Enterprises, Inc., the parent company of Rainbow DBS, had a cash balance pro forma for the financing completed in August of approximately $661.2 million. Fitch believes that Rainbow Media Enterprises liquidity is sufficient to fund the exit of the DBS business.
Cablevision Systems Corporation and CSC Holdings, Inc. announced that the companies have entered into an agreement to sell its direct broadcast satellite, Rainbow 1, and related assets, including an earth station and certain FCC licenses to Echostar Communications Corporation for $200 million in cash. This decision follows the companies' earlier decision to suspend efforts to spin off Rainbow Media Enterprises, Inc. to Cablevision shareholders.
Contact: David Peterson +1-312-368-3177 or Michael Weaver +1-312-368-3156, Chicago.
Media Relations: Brian Bertsch +1-212-908-0549, New York
