Fitch Rates CSC Holdings' Bank Facility 'BB'.

CHICAGO -- Fitch Ratings has assigned a 'BB' rating and a Recovery Rating of 'RR1' to the $2.4 billion senior secured bank facility entered into by CSC Holdings, Inc. (CSC). CSC is a wholly owned subsidiary of Cablevision Systems Corporation (Cablevision). In addition, Fitch has assigned a 'B+' Issuer Default Rating (IDR) to Cablevision and has assigned a 'CCC+' issue rating and a 'RR6' recovery rating to Cablevision's senior unsecured debt. CSC's IDR is affirmed at 'B+', while the Rating Outlook for all CSC and Cablevision ratings remains Negative. Approximately $1.3 billion of the $1.4 billion of proceeds CSC received from the term loans included in the bank facility was utilized to refinance outstanding borrowings under CSC's bank facility that was set to mature on June 30, 2006.

Fitch notes that the new bank facility includes a provision to permit $3.1 billion of additional secured bank debt. Proceeds from the incremental bank debt are expected to be used to fund a $3 billion special dividend. CSC's IDR as well as the various issue ratings assigned to CSC's debt and the corresponding Recovery Ratings reflect the high probability that a special dividend will be declared by Cablevision's board of directors.

Fitch's ratings continue to reflect the expectation that CSC will fund a debt-financed $3 billion special dividend as well as the elevated leverage profile following the dividend. From Fitch's perspective, the increased leverage will constrain the company's financial flexibility and diminish its ability to generate free cash flow. Fitch estimates that pro forma for the financing related to the special dividend, CSC's leverage as of the end of 2005 would increase to approximately 7.2 times (x) from 5.3x, and leverage within the company's restricted group will increase to approximately 6.3x from 4.1x at the end of 2005.

Fitch's ratings and Negative Rating Outlook reflect Fitch's ongoing concern related to the company's financial policy and the potential for the company to continue to place greater priority on returning capital to shareholders at the expense of bond holders, as well as the ongoing possibility that company management will use distributions from the restricted group to fund other investments. Factors that would contribute to a Stable Rating Outlook for CSC include an evaluation of the company's commitment to improving and maintaining a stable credit profile as well as the continuation of the company's positive subscriber and operational trends.

Fitch's ratings also incorporate the increasing business risk stemming from the persistent competition for subscribers from the DBS operators as well as Fitch's expectation that Verizon's entry into video services will heighten the competitive pressures within CSC's markets. While Fitch believes CSC's triple play service offering strengthens the company's competitive position, Fitch expects that the increased competition can potentially lead to operating margin pressure driven by increased subscriber churn and elevated subscriber acquisition and retention spending. However Fitch believes that the company has a strong competitive position to address the increased competition as CSC continues to gain operating scale within its cable telephony and advanced digital video products. Fitch expects that the continued diversification of the company's revenue-generating units will increase ARPU and drive EBITDA growth during 2006. In Fitch's opinion, free cash flow generation from the cable operations during 2006 will be further pressured by increasing success-based capital expenditures.

Fitch believes that CSC's liquidity position is stable and is supported by available borrowings from the $1.0 billion revolver included in the new bank facility. A modest maturity profile through 2008 adds flexibility to the company's liquidity position.

Fitch has affirmed the following CSC ratings:

-- Issuer Default Rating at 'B+';

-- Senior secured bank facility at 'BB/RR1';

-- Senior unsecured debt at 'BB-/RR3';

-- Senior subordinated debt at 'B/RR5'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site. The issuer did not participate in the rating process other than through the medium of its public disclosure.