S&P rates Cablevision notes

Standard & Poor's said it assigned its B+ rating to Cablevision Systems Corp.'s proposed $1.5 billion of combined fixed- and floating-rate senior unsecured notes. Also, a BB- rating was assigned to intermediate holding company CSC Holdings Inc.'s proposed $500 million senior unsecured notes.

These ratings are placed on CreditWatch with negative implications, in conjunction with existing ratings on Cablevision.

The existing ratings, including the BB corporate credit rating, remain on CreditWatch with negative implications, as failure to complete the planned spin-off of the satellite business in 2004 could materially weaken the company's credit profile, the agency said.

S&P said proceeds of the note offerings will be used to repay $350 million of high-cost senior subordinated debt and $1.5 billion of preferred stock at CSC Holdings. To the extent the note issues are upsized, additional proceeds will be used to repay other senior subordinated debt and/or bank debt at CSC Holdings.

S&P said the ratings reflect Cablevision's relatively high ongoing level of consolidated debt to EBITDA, which was about 7.9x for 2003 (including preferred stock and stock plan expense, excluding collateralized debt and restructuring charges, and adjusted for operating leases and financial guarantees), or 7.6x excluding stock plan expense. Cablevision also has some additional financing requirements and faces increasing competition from direct broadcast satellite.

However, Cablevision continues to benefit from the attractive demographics of its cable TV franchise area, which serves about 2.9 million customers. This base provides good potential for expansion of digital and cable modem broadband services, both of which are expected to continue to be aggressively marketed.

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