Cablevision predicts reduced cash flow in 2012, citing capital expendituresOfficials from the Cablevision Systems Corporation said this week that the company's fourth quarter earnings were down from the year prior, a result of its aggressive investment strategy.

Company executives reported this week that the firm recorded a 47 percent drop in its fourth quarter net income. Cablevision chief financial officer Gregg Seibert said that the media company also expects its free cash flow to fall in 2012, as it substantially increases payments toward capital expenses.

Bloomberg reports the company does not plan to raise subscriber rates this year, even as it faces mounting competition and squeezed operating margins. Seibert affirmed Cablevision would increase efficiency and work to augment profits through business cost reduction initiatives, among other campaigns.

On a more positive note, the company reported that its consolidated net revenues climbed 7.3 percent to $1.69 billion in the fourth quarter. Moreover, its adjusted operating cash flow increased 21 percent to $626 million, while its consolidated operating income jumped 28.3 percent to $346 million. Cablevision chief executive James L. Dolan conceded the company spent heavily last year, but he said its strategic investment would help drive future revenue and profit growth.

The company's last fiscal year "was an important year for Cablevision as it marked the culmination of several multi-year initiatives to enhance shareholder value," Dolan said in a statement. "Those efforts have included spinning off MSG and AMC, completing the Bresnan acquisition, paying quarterly cash dividends, and actively conducting a share buyback program. We remain confident in the strength of our underlying business and in our ability to deliver industry-leading products. Looking ahead, we will continue to improve on those offerings while we remain focused on enhancing shareholder returns and building the company for the long term."

The company failed to achieve cost reduction targets as it invested in cable set-top box inventories. Moreover, the media giant spent aggressively to upgrade its networks over the past year, a move that some analysts said could have been offset by raising customer rates. Seibert noted the company had bolstered its long-term growth potential through the strategic investments. Analysts noted the firm could boost profits in the future through supply chain management initiatives.

"The main theme that people should take away from the call today is that we continue to be focused on moving the business in a direction where we both retain existing subscribers and have attractive, economically sensible offers for new subscribers," Seibert said.

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