In a surprise move, Cablevision Systems Corp. has decided to sell a 20
percent stake in its Rainbow Media Group programming arm to Metro-Goldwyn Mayer
Inc. for $825 million.
Included in Rainbow are American Movie Classics, Bravo, The Independent Film
Channel and WE: Women's Entertainment (formerly Romance Classics).
Cablevision said in a prepared statement that it plans to move forward with a
proposal to issue a tracking stock for Rainbow, and it will hold a shareholders'
meeting Feb. 16.
Rainbow, on the block since November, was widely believed to have taken down
its 'for sale' sign in the past few days. According to published reports,
Cablevision was discouraged that bids on the asset came in under the $4 billion
to $5 billion price tag the MSO had placed on Rainbow.
The MGM deal values Rainbow at $4.125 billion.
'This partnership will provide an opportunity to enhance Rainbow's networks,
particularly as we move these channels into the digital era,' Cablevision CEO
James Dolan said in a prepared statement.
Cablevision currently owns a 74 percent interest in and manages Rainbow, with
NBC owning the other 24 percent. After the transaction is closed -- expected in
two months -- Cablevision will continue to manage the operation.
'This is the first step in MGM's vertical-integration strategy in the United
States, and it would be a mistake to assume that it will be the last,' MGM
chairman Alex Yemenidjian said in a prepared statement.