Cablevision Systems Completes Sundance Acquisition

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Rainbow Media, Cablevision Systems’ programming subsidiary, Tuesday announced it has wrapped up its $496 million purchase of the Sundance Channel from a group of owners including NBC Universal, CBS and founder Robert Redford.

The 12-year-old channel — first owned by Viacom's Showtime (now part of CBS), Redford and Polygram Filmed Entertainment (which migrated to NBC) — went on the market in February after neither NBCU (which owns 57%) nor CBS (37%) could buy out the other partners.

UBS Investment Bank handled the sale, said to have drawn interest from more than one strategic buyer.

Cablevision will pay NBCU with 12.7 million shares in NBCU parent General Electric that it got through the sale of Bravo to NBCU in 2002. The asset had gained in value (possibly as much as $80 million), but Cablevision will be using it in a tax-free exchange.

CBS and Redford, who owned 6%, will receive cash. Cablevision said there'll be a cash adjustment with NBCU at closing based on the value of the GE shares in relation to the total purchase price.

Analysts think Cablevision will find cost savings through functional association with Rainbow channels IFC, AMC and WE TV. But it seems likely Sundance will continue as a separate channel: Redford's “continuing relationship” with the new owner is one such indication.

Sundance has about 30 million subscribers. When the deal was first announced in early May, Pali Research analyst Richard Greenfield valued the deal at a pricey 24 times estimated annual cash flow of $20 million at the channel.

Sundance's programming is a blend of indie films and, increasingly, original series such as Iconoclasts and Live From Abbey Road, as well as newer environmental fare, such as Big Ideas For a Small Planet and the block Robert Redford Presents The Green.

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