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Peacock Yelling `Bravo?'

10/07/2002 11:34 AM Eastern

Cablevision Systems Corp. could be close to a deal to sell its Bravo cable
network to General Electric Co.'s NBC television unit in a stock-and-cash deal
worth about $1.2 billion, or about 20 times Bravo's estimated 2002 cash flow of
$65 million.

According to published reports, NBC -- which already owns a 21 percent stake
in Rainbow Media Corp., Cablevision's programming arm, which includes Bravo --
would swap its interest in the Bethpage, N.Y.-based MSO for the remaining
interest in Bravo, plus cash.

Aside from the Bravo stake, NBC owns about 53 million Cablevision shares.

Speculation that a deal was in the works was fueled by a filing by NBC late
Friday, in which it stated that it continues to evaluate its position in the
MSO, and that it could attempt to monetize it or exchange it for Cablevision's
other assets.

This isn't the first time Cablevision has tried to sell its programming
assets. In 2000, the MSO puts its Rainbow assets up for auction, attracting bids
as high as $4 billion, but it later pulled them off the block.

While it appears that Cablevision and NBC are close to a deal, this most
recent attempt to sell programming assets could have the same fate. The big
difference this time is that Cablevision needs cash. The MSO has been under
pressure for months to raise cash to bridge a $500 million to $1 billion funding
shortfall in 2003.

'It's unfortunate if they've got to sell properties in this market,' SunTrust
Robinson Humphrey Capital Markets analyst Gary Farber said. 'Six or seven months
ago, you may have thought otherwise, but at this point, almost anything to get
the leverage down is positive. You'd rather see them pay down debt than take out
their partner.'

The value of the transaction to Cablevision depends on how much cash is
included in the deal, ranging from as little as $200 million to $500
million.

According to some analysts, Bravo's estimated 2002 cash flow is about $65
million. Assigning a 20 times multiple to that number gives you $1.2
billion.

With an 80 percent interest in Bravo, Cablevision would stand to receive
about $960 million from the deal. However, the cash portion would hinge on the
value placed on NBC's Cablevision shares.

At 4 p.m. Monday, the stock was priced at $7.50 each (up 1 cent per share),
making NBC's stake worth nearly $400 million, which would leave the cash portion
of the deal at $560 million. However, sources said, NBC is pushing for a higher
valuation of its Cablevision stock, which would drive down the cash
portion.

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