Brean Capital Reiterates Hold Rating on Cablevision Systems Corporation on Weak 4Q12 Results, Multiple Challenges

In a report published Friday, Brean Capital reiterated its Hold rating on Cablevision Systems Corporation CVC. Brean Capital noted, “Cablevision reported a significant deterioration in operating and financial results in 4Q12. While Hurricane Sandy was a material issue during the quarter, excluding the impact of the storm underlying results continue to deteriorate due to higher programming costs, competitive pressures, and an increase in capital expenditures. Cablevision has made significant investment to its content and infrastructure after years of underinvestment and year-over-year comparisons should reverse in 2H13; however we believe the company continues to face multiple hurdles in its efforts to return to growth including further increases in programming costs and continuing competition pressures. Moreover, with the sale of Optimum West for $1.6 billion (bought in 2010 for $1.4 billion) to Charter Communications (CHTR, Not Rated, $86.39) Cablevision will lose its primary source of growth, but the company's high levels of debt may preclude any improvement in capital returns as proceeds from the sale are expected to be used primarily to pay down debt.” Cablevision Systems Corporation closed on Thursday at $13.99.