DBRS Confirms Cablevision/CSC Holdings at B (low) and BB (low)/B (high)

Dominion Bond Rating Service (“DBRS”) has today confirmed the ratings of Cablevision Systems Corporation (“Cablevision” or the “Company”) and its wholly owned financing subsidiary, CSC Holdings, Inc. (“CSC Holdings”) at B (low) and BB (low)/B (high), respectively. All trends are Stable.

Cablevision’s ratings remain stable at this time after being downgraded in December 2005 after DBRS’s expectations were confirmed that the Company would fund a special $3 billion dividend payment to shareholders with debt at CSC Holdings. DBRS notes the Company completed this payment in April 2006 after adding $3.1 billion of additional debt on March 29, 2006.

While the additional debt at CSC Holdings (supported by the cable operations) has pressured the financial risk profile at this level (debt-to-EBITDA of roughly 6.5 times), cable’s strong franchise continues to experience good growth and has been further supported by bundling subscribers with its portfolio of triple-play services. This continues to drive higher industry-leading penetration levels for new services (high-speed Internet, digital, and telephony). As a result, Cablevision has (1) driven ARPU to significant levels of over $100 per month; (2) notably lowered customer turnover; and (3) benefited from growth in basic cable subscribers with subscribers migrating back from satellite. The Company has managed to accelerate this growth while keeping its cable EBITDA margins strong at just under 40%. DBRS expects this EBITDA growth and success in bundling subscribers to continue for Cablevision over the medium term as it is expected to take full advantage of this competitive advantage versus the telcos while it continues to exist.

DBRS expects competition to increase for Cablevision as telcos begin to deploy terrestrial video services. This is expected to allow the telcos, which have considerably stronger balance sheets and significant scale, to offer bundles of three and four services (including wireless) to better compete with Cablevision in its franchise area. While DBRS notes that Cablevision currently lacks a wireless offer as part of its bundle, this may be less critical over the next couple of years in a highly penetrated New York City area market until converged wireline and wireless services are developed and take hold. Furthermore, Cablevision could look to join Sprint Nextel Corporation’s joint venture with other cable companies to add wireless to its bundle and develop converged services.

From a financial perspective, DBRS expects cash flow from operations to remain roughly stable in 2006 as higher interest costs will counter EBITDA growth. While free cash flow is expected to be modest in 2006 at around $150 million, free cash flow should accelerate with organic growth thereafter and allow Cablevision to gradually reduce its debt levels. Therefore, DBRS expects leverage (both absolute and relative) to be reduced in an incremental fashion over time.