Cablevision To Go Forward With Rainbow Spin


Cablevision Systems said Thursday that its board of directors has authorized management to move forward with the leveraged spin-off of its Rainbow Media Holdings programming unit to Cablevision's stockholders.
The spin would be constructed as a tax-free pro rata distribution to stockholders and is expected to be completed by mid-year 2011.
Cablevision said in November that it would explore a Rainbow spin. Cablevision also completed a spin-off of its Madison Square Garden unit earlier this year.

"We believe this will provide both Cablevision and Rainbow with greater flexibility to freely pursue their own strategic objectives and individual business plans, while allowing investors to more clearly evaluate each of the separate companies' assets and future potential," Cablevision CEO James Dolan said in a statement.
As part of the leveraged spin-off, a refinancing of what will be the new Rainbow would create new debt, a portion of which would be used to repay approximately $1.25 billion of Cablevision and/or CSC Holdings, LLC debt. It is anticipated that the spin-off would be in the form of a pro rata distribution to all stockholders of Cablevision, with holders of Class A common stock receiving Class A shares in Rainbow and holders of Class B common stock receiving Class B shares in Rainbow. Both Cablevision and Rainbow would continue to be controlled by the Dolan family through their ownership of Class B shares.
The new Rainbow's assets will include:
• National programming networks: AMC, WE tv, IFC, Sundance Channel and Wedding Central
• IFC Entertainment, an independent film business that consists of multiple brands - including IFC Films, IFC Productions and the IFC Center
• Rainbow Network Communications, a full service network programming origination and distribution company, delivering programming to the cable, satellite and broadcast industries
Cablevision would retain its cable and telecommunications businesses, Newsday, News 12 Networks, MSG Varsity and Clearview Cinemas.
Completion of the spin is subject to several external conditions, including receipt of a private letter ruling from the Internal Revenue Service, and final approval from its board of directors.
Cablevision reiterated that it is not considering the sale of Rainbow or its cable and telecommunications business.