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    cablevision systems 2003ar cablevision systems 2003ar Document Transcript

    • letter to shareholders 2003
    • 4.4 million homes passed
    • Dear Shareholders BY YEAR-END 2003, CABLEVISION HAD CHARTED A COURSE for the company’s future. After years of dedicated development, we complet- ed the rebuild of our extensive broadband network, creating one of the best and most advanced telecommunications systems in the world. This accom- plishment makes Cablevision one of the only companies able to offer all its innovative services to every customer in its footprint. The completion of our rebuild also brings to an end an era of significant cap- ital investment. Now, we are able to turn our full attention and resources to producing steady returns by making incremental investments in revenue- generating services. Today, Cablevision’s customer bundle includes the company’s new Optimum Voice digital voice-over-cable service, as well as our iO: Interactive Optimum digital video and Optimum Online high-speed Internet services, both of which grew at impressive rates in 2003. Solidifying Cablevision’s role as a leading provider of high-definition (HD) programming this past year was Rainbow DBS’s launch of VOOM, a televi- sion satellite service to meet the demands of today’s rapidly growing, but underserved, HDTV audience. We also began laying the groundwork for new investment opportunities for our shareholders. In late October, we unveiled a plan to create two distinct companies, each with defined business plans and clear investment charac- teristics. Remaining with Cablevision will be the telecommunications and Lightpath businesses, as well as our New York assets, including Madison Square Garden. Comprising the new entity will be: Rainbow DBS; three of Rainbow Media’s national entertainment services – AMC, IFC (The Independent Film Channel) and WE: Women’s Entertainment; and certain other Rainbow businesses. With the spin-off expected to be completed later this year, we look forward to offering two compelling investment choices that reflect the sound strategic position of Cablevision and this newest combina- tion of Rainbow assets. Cablevision is committed to delivering value to consumers and shareholders alike as we continue to shape the industry and secure our future with digital offerings, while capitalizing on the many opportunities that lay ahead. 3
    • There’s only one New York, and helped to make Cablevision’s national programming options, Cablevision is serving it better than iO: Interactive Optimum digital such as iO en Español, the indus- ever. Now, 4.4 million homes in the video offering the fastest-growing try's most comprehensive slate of New York metropolitan area have service in the company’s history. Spanish-language networks. complete access to Cablevision’s Ending 2003 with 905,000 cus- portfolio of services over our new tomers, four times as many as at Another Cablevision success story, 40,000-mile fiber-rich network. the end of 2002, iO now offers our Optimum Online (OOL) high- These advanced, integrated offer- customers access to a wide array speed Internet offering continues to Consumer Services ings simplify life for busy New of networks and powerful new be one of the fastest and most reli- Yorkers as they communicate in technologies, including: 700 titles able broadband services in the the nation’s most demanding and of video-on-demand (VOD) con- nation. OOL ended 2003 with 1.1 attractive business and entertain- tent available at all times; 14 HD million customers, up 37 percent ment marketplace. programming services, featuring from year-end 2002. The service also the industry’s first and only HD saw its industry-leading penetration In 2003, our telecommunications VOD offering; groundbreaking rate of homes-passed increase to 24 services division, which includes interactive applications; and inter- percent by year-end 2003. the company’s analog and digital video, high-speed data, voice and Three out of four people in Cablevision’s footprint Lightpath commercial telecommu- who subscribe to a high-speed data service are nications businesses, capitalized Optimum Online customers. on the success of our superior LITCHFIELD network, recording a 12 per- DUTCHESS ULSTER cent increase in net revenue. CONNECTICUT NEW YORK Meanwhile, the total combined PUTNAM NEW HAVEN ORANGE number of video, data and voice FAIRFIELD WESTCHESTER customers, or revenue-generating ROCKLAND SUSSEX PASSAIC units (RGUs), was 4.9 million, up BERGEN WARREN MORRIS SUFFOLK BRONX 25 percent from 2002. ESSEX NY QUEENS HUDSON NEW JERSEY NASSAU BROOKLYN UNION STATEN ISLAND Today, more than 30 percent of SOMERSET Cablevision Service Areas MIDDLESEX our cable customers receive digi- MERCER MONMOUTH tal services, compared with only 7 OCEAN percent a year ago. This has 4
    • The Academy of Television Arts & Sciences awarded iO a 2003 technical Emmy® for Outstanding Achievement in Interactive Television. became the first cable operator to offer a competitive VoIP serv- ice throughout our footprint. Given Optimum Voice’s ease of use and low cost, we expect cus- tomer numbers to climb signifi- cantly in 2004 with the introduc- tion of new calling features. Business Products Lightpath’s network Also holding strong, especially in demonstrated incredible the face of lingering softness in resilience on August 14, By year-end 2004, the telecommunications sector, maintaining full system Cablevision's nationally was Lightpath, which reported a availability for all customers recognized educational 13 percent increase in net revenue for the duration of the East initiative, Power to in 2003. Cablevision’s business Coast blackout. Learn, will bring the telephony and data division also Internet to more than recorded a 10 percent rise in the 2,100 schools and Completing the bundle – and cap- number of buildings on net this libraries in the company’s italizing on the strong consumer past year. service area while demand for a competitive and strengthening the home- reliable voice service – is school connection with Cablevision’s newest product, powertolearn.com, which Optimum Voice. Introduced in the provides educational fall and now available across our content and tools to entire service area, Optimum teachers, students and Voice attracted 29,000 cus- parents throughout the tomers by year-end 2003 as we New York area. Now available to more than 4 million homes-passed in the New York metropolitan area, Optimum Voice offers unlimited calling across the United States and Canada, and five popular calling features for the low, flat monthly rate of $34.95. 5
    • Madison Square Garden remained the world’s pre- mier entertainment venue in 2003, hosting hundreds of memorable events, including The Simon & Garfunkel Reunion and Chris Rock’s “Black Ambition Tour.” Continuing to play an important Also at the Garden, and role in New Yorkers’ lives are leading the NBA in ticket Cablevision’s entertainment ven- revenue for the 12th straight ues, sports teams, and local and year, the “new” New York regional programming networks. Knicks welcomed two-time all-star Stephon Marbury, live theatrical stage production Billboard’s 2003 quot;Venue of the basketball luminary Isiah featuring the crooner’s image, Year,quot; Madison Square Garden, Thomas and the NBA’s all- voice and work. Meanwhile, the Entertainment & Sports attracted more than 4 million visi- time winningest coach Radio City Christmas Spectacular tors to hundreds of events this past Lenny Wilkens, while the and world-famous Rockettes con- year, including the 45th annual Rangers added top scorer Jaromir tinued to attract audiences across Grammy Awards, the Jagr for the 2003-2004 season. the country, and A Christmas Carol Rolling Stones’ HBO con- Meanwhile, the Liberty remained celebrated a successful 10th and cert special and The No. 1 in ticket revenue, with atten- final season. Z-100 Jingle Ball. In dance among the top in the WNBA. August 2004, “The Also making news in 2003 was World’s Most Famous Radio City Music Hall also had a Fuse. Formerly muchmusic usa, Arena” will host the first banner 2003, as more than 1.4 mil- the successfully re-branded Fuse Republican National lion visitors passed through its turn- grabbed national attention this Convention ever stiles to attend an array of shows, past year for its meteoric rise to held in New including the 20th Anniversary of become the nation’s fastest-grow- York City. the MTV Video Music Awards, the ing cable network in the coveted Tony Awards and a run of sold-out 12- to 24-year-old demographic, performances of Sinatra: His Voice. with more than 29 million viewing His World. His Way, the first official subscribers. VJs Marianela Pereyra and Dennis Da Menace with Outkast’s Andre 3000 and Big Boi at Fuse’s new street-front studio in midtown Manhattan. 6
    • MetroChannels’ Full Frontal Fashion At the same time, Clearview Cinemas provided added convenience for New Yorkers in 2003 with a multi-year, multimillion-dollar deal with significant strides, debuting remote ticketing provider two new, original series, while AOL MovieFone. welcoming back 52 days of Full Frontal Fashion to MetroStories. Complementing its New York prop- Metro Traffic & Weather also erties this past year was celebrated a successful year, Cablevision’s local and regional launching an all-new traffic map- programming. The company’s five- ping system to remain New York’s channel News 12 Networks received most reliable source of local traffic a host of accolades in 2003, includ- Regional Programming information, with a cumulative ing 10 New York Emmys and 13 average of 750,000 homes tuning National Telly Awards, while provid- in each day. ing even more local news and con- tinuous updates at a faster pace to In 2003, MSG Networks cablecast meet the needs of its busy viewers. hundreds of live events in HD and garnered five Emmys. And the With more than 7 million viewing company’s Rainbow Sports subscribers, the company’s Networks extended carriage of the MetroChannels also marked a NHL’s San Jose Sharks and memorable 2003. Awarded six Columbus Blue Jackets, the NBA’s New York Emmys, MetroTV made Cleveland Cavaliers and MLB’s Beyonce and Jay-Z perform Oakland A’s. These networks at Radio City Music Hall. include five regional sports channels reaching 19 million viewing subscribers in San Francisco, New England, Florida, Ohio and Chicago, and a 50 percent interest in the national Fox Sports Net. 7
    • New 2003 Mag Rack titles include Personal Trainer, which offers home workouts in aerobics, kickboxing, Pilates, belly dancing and more for all fitness levels, 24/7. Mix It Up, a Courteney Cox-David Rainbow Media Holdings LLC broke industry veterans Peter Guber and new ground in 2003, expanding its Peter Bart, launched in October Arquette creation. In addition, the content offerings as it continued to 2003 to rave reviews. Also notewor- network published a book with develop its popular programming. thy for AMC were American Simon & Schuster based on WE’s celebrated series When I Was a Girl, Cinematheque Tributes honoring Spurred by increases in both adver- Denzel Washington and Nicole tising revenue and subscriber num- Kidman. bers, Rainbow’s core networks National Programming recorded revenue growth of 24 per- In 2003, IFC (The Independent Film cent to $609 million. Channel) marked another success- ful year of its signature series Dinner for Five, announcing a third Currently in 74 million viewing Sean quot;P. Diddyquot; Combs, homes, AMC’s prime-time house- season for 2004. In addition, the Vincent Pastore, John hold ratings were up 13 percent this network, which now has 30 million Leguizamo (back to camera), past year. Meanwhile, the network’s viewing subscribers – up from 26 Jon Favreau and Juliette Lewis new weekly series, Sunday Morning million in 2002 – launched IFC on IFC’s Dinner for Five. ShootOut, hosted by entertainment Films On Demand and Uncensored On Demand, two popular, new sub- which features Sparks fly on AMC’s Sunday scription VOD services. IFC also accomplished Morning ShootOut as hosts unveiled its most ambitious original women relating Peter Bart and Peter Guber programming slate ever for 2004 personal child- debate the week’s biggest with eight original productions, hood stories. stories in the world of movies while its documentary release on and entertainment. 1970s American cinema, A Decade Rainbow also expanded Under the Influence, opened to its leadership in the on-demand critical acclaim. arena in 2003. Mag Rack, the com- pany’s suite of on-demand video Reaching nearly 47 million U.S. magazines, extended distribution to households in 2003, WE: Women’s 2.1 million homes and launched exciting new titles such as Personal Entertainment premiered its first original film, Between Strangers Trainer. In addition, the company introduced World Picks On starring Sophia Loren, and Demand, an SVOD service offering launched a new home-design show, 8
    • On July 17, Rainbow DBS launched Rainbow 1, a state-of-the-art satel- ® lite that led to the introduction of VOOM, a television service deliver- ing more HD programming than any other satellite or cable service in the nation. dented amount of HD programming is made possible by Rainbow 1. Hindi, Latino, Mandarin and Russian With its ahead-of-the-curve tech- programming, and sportskool, the nology, this single satellite provides nation’s first VOD cable network unparalleled capacity that will dou- dedicated to expert sports and fit- ble with the arrival of MPEG-4. ness instruction. Rainbow DBS is in a unique position to take advantage Perhaps the most significant new of this compression technol- endeavor by Rainbow this past year ogy to maximize the deliv- was the creation of an integrated ery of its advanced program- Satellite Television suite of 21 brand-new HD channels. Mia Hamm, sportskool Leveraging Rainbow’s national and niche programming expertise, this ming across the continen- content package represents the tal United States. This largest single source of programming ability to deliver con- Ten film channels that created exclusively for HDTV. tent to consumers on offer the largest selection of HD movies available anywhere a much wider scale Scary movies taken to the next This suite of 21 channels forms the than ever before is due level by the power of HDTV A cinematic celebration of the silver core of Cablevision’s new HD-cen- to the power of screen, featuring timeless films tric programming satellite service, Rainbow 1 and is remi- Sports action from around the globe, including exclusive HD VOOM. Introduced in October 2003, niscent of the incredi- coverage of Spanish Premier League soccer this service, managed through ble opportunities cable Heart-pounding, in-your-face, extreme sports like skydiving, snowboarding, Cablevision’s Rainbow DBS satellite provided in 1973 when surfing and skateboarding division, delivers more HD program- Cablevision began dis- All music, all the time, with unri- valed resolution and audio clarity ming than any other satellite or cable tributing its content to A new destination for the latest service in the nation. In addition to outlying neighborhoods in fashion, beauty and style The amazing world of collectibles, more than 30 HD channels, VOOM across the nation’s first collectors and auctions features the latest in HD technology. suburban cable sys- An exploration of the world’s great- est museums, art galleries and architecture In 2004, this will include a ground- tem. As we move for- Long- and short-form animation, from breaking digital video recorder capa- ward, we see a promis- award-winning festivals to cartoon classics Headlines, weather, sports, ble of recording and playing back HD ing future, with VOOM feature stories and video essays, all in HD programming. as the centerpiece of a A stunning, continuous flow of images set to music, creating a new artistic new company entering medium uniquely suited to HD VOOM’s ability to deliver an unprece- an exciting new era. 9
    • CONSUMERS DEPEND ON CABLEVISION’S DIGITAL SERVICES and technologies to improve their daily lives. Today, Cablevision stands alone in delivering these integral products across the world’s most advanced network to millions of loyal cus- tomers in the nation’s most attractive market. Going forward, as we focus on our core assets and strengthened financial position, we will continue to provide cutting-edge services and extend the boundaries of communications. We will also unveil a new company that honors Cablevision’s 30-year heritage as a con- tent leader, setting the stage for new opportunities. Thank you Thank you to our co-workers, customers, financial partners and shareholders. It is because of you that consumers will look to Cablevision for decades to come as we deliver products and servic- es that continue to entertain, excite and enable. Respectfully submitted, April 2004 Charles F. Dolan James L. Dolan Chairman President and Chief Executive Officer James L. Dolan and Charles F. Dolan pictured at the company's fully digital programming origination center. 10
    • Board of Directors Corporate Management Group Charles F. Dolan Charles F. Dolan Chairman Chairman James L. Dolan James L. Dolan President and Chief Executive Officer President and Chief Executive Officer Chairman, Madison Square Garden William J. Bell Vice Chairman William J. Bell Vice Chairman Patrick F. Dolan President, News 12 Networks Hank J. Ratner Vice Chairman Thomas C. Dolan Vice Chairman, Madison Square Executive Vice President Garden Charles D. Ferris Michael S. Alpert Partner, Mintz, Levin, Cohn, Ferris, Corporate Executives Senior Executive Vice President and Glovsky and Popeo, P.C. Chief Operating Officer, Rainbow DBS Richard H. Hochman Patrick F. Dolan Chairman, Regent Capital President, News 12 Networks Management Corp. Thomas C. Dolan Sheila A. Mahony Executive Vice President Former Executive Vice President and Chief Information Officer Victor Oristano Wilt Hildenbrand Chairman, Alda Limited Partners Executive Vice President, Engineering Steve N. Rattner and Technology Managing Principal, Quadrangle Joseph J. Lhota Group LLC Executive Vice President, Corporate Thomas V. Reifenheiser Administration, and President, Retired Managing Director, Lightpath JPMorgan Chase Steve Mills John R. Ryan President and Chief Operating Officer, Retired Vice Admiral, U.S. Navy Madison Square Garden Sports President, SUNY Maritime College Andrew B. Rosengard John L. Tatta Executive Vice President, Finance Retired President, Cablevision Thomas M. Rutledge Systems Corp. President, Cable and Vincent Tese Communications Director, The Bear Stearns Joshua W. Sapan Companies President and Chief Executive Officer, Rainbow Media Holdings LLC Jonathan D. Schwartz Executive Vice President and General Counsel 11
    • Annual Meeting Corporate Headquarters The annual meeting of stockholders Cablevision Systems Corporation will be held on May 25, 2004, at 1111 Stewart Avenue 10:00 a.m. at Cablevision’s Bethpage, NY 11714-3581 corporate headquarters. Web Address Independent Auditors Cablevision can be found on the KPMG LLP Internet at www.cablevision.com Melville, NY Financial Reports Transfer Agent and Registrar Financial reports, including Form Mellon Investor Services 10K, Form 10Q and annual reports, 85 Challenger Road can be accessed and ordered online Overpeck Center at www.cablevision.com Ridgefield Park, NJ 07660 1-800-851-9677 You may also obtain financial * This letter to shareholders contains statements documents by contacting: that constitute forward-looking statements within the meaning of the Private Securities Litigation Created by C2 Creative and Cablevision Cablevision Systems Corporation Reform Act of 1995. These forward-looking state- Corporate Communications, Investor Investor Relations ments include 2004 free cash flow, among others. Relations and Controller’s Group 1111 Stewart Avenue Investors are cautioned that any such forward-look- ing statements are not guarantees of future perform- Boy using laptop [Cover] - Simon Watson/Getty Images Bethpage, NY 11714-3581 ance or results and involve risks and uncertainties, Girl doing handstand - Jim Arbogast/Getty Images 516-803-2270 and that actual results or developments may differ Woman using laptop - Mark Douet/Getty Images investor@cablevision.com materially from those in the forward-looking state- Children watching TV - Digital Vision/Getty Images ments as a result of various factors, including finan- Girl on phone - Jim Bastardo/Getty Images cial community and rating agency perceptions of the Madison Square Garden - MSG Photos Earnings Information company and its business, operations, financial con- Chris Rock - George Kalinsky for Madison Square Garden Press releases can be accessed dition and the industry in which it operates, and the Simon & Garfunkel - George Kalinsky for Madison factors described in the company’s filings with the Square Garden online at www.cablevision.com Securities and Exchange Commission, including the Jaromir Jagr - Bruce Bennett Studios sections entitled “Risk Factors” and “Management’s Stephon Marbury - MSG Photos Stock Information Discussion and Analysis of Financial Condition and Beyonce & Jay-Z - Frank Micelotta/Getty Images Results of Operations” contained therein. The com- Karolina Kurkova - ©Jennifer Graylock/jpistudios.com Cablevision Systems Corporation pany disclaims any obligation to update the forward- Man viewing screens - G D T/Getty Images is listed on the New York Stock looking statements contained herein. Man with kids using computer - Keith Brodsky/ Exchange under the symbol CVC. Getty Images Woman exercising - Barry Yee/Getty Images Stockholder Information