Cablevision Explores Rainbow Spin To Shareholders

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Cablevision Systems said Thursday that its board of directors has authorized its management to investigate a spinoff of its Rainbow Media Holdings unit.

The separation, if completed, would be in the form of a tax free spin-off to shareholders.
Rainbow, headed by CEO Josh Sapan, includes national networks AMC, IFC, Sundance Channel, We TV and Wedding Central.

The spin would also encompass IFC Entertainment, the independent film business that consists of multiple brands, including IFC Films, IFC Productions and the IFC Center, and Rainbow Network Communications, a full-service network programming origination and distribution company that supplies varied services to the cable, satellite and broadcast industries

Cablevision completed a spin of its Madison Square Garden unit early this year.

Cablevision said businesses that are expected to remain a part of Cablevision, should the Rainbow spin-off occur, include the cable and telecommunications business, Newsday, News 12 Networks, MSG Varsity and Clearview Cinemas.

The company would target mid-year 2011 for completion of the proposed spin-off, which is subject to a number of factors, including receipt of a private letter ruling from the IRS and approval by the board of directors. Cablevision notes that there can be no assurance that a transaction will be consummated.

Cablevision said it is not considering the sale of Rainbow or its cable and telecommunications business.

In 2008, Cablevision said it would find ways to "close the gap" between public and private valuations of the company. That gap has long been called the "Dolan Discount."

At that time, spinning off Rainbow as a separate public company was considered a strong possiblility by analysts. Some analysts further speculated that after content and operations were separated, Cablevision's ruling Dolan family might make another attempt to take the cable company private.

Cablevision's stock was up $2.53, or 8.75%, to $31.46 in mid-morning trading.

Cablevision has had a busy year, even apart from its retransmission standoff with Fox Networks that led to a Senate hearing on retransmission consent Wednesday. After the MSG spin, Cablevision surprisingly won an auction to buy the Bresnan Communications cable systems in the Rocky Mountain region for nearly $1.4 billion.

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