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Cablevision Suspends Spinoff Of Its Rainbow Media Unit
A WALL STREET JOURNAL ONLINE NEWS ROUNDUP
December 21, 2004 11:06 a.m. ET
Cablevision Systems Corp. said its board suspended plans to spin off
of Rainbow Media Enterprises and instead will pursue strategic
alternatives for the satellite and entertainment unit.
The board's decision, disclosed in a Securities and Exchange
Commission filing, didn't provide any additional details about
possible alternatives. It marked the latest twist in Cablevision's
roadmap for offloading the business, which operates the nascent
satellite-TV service Voom, as well as cable-TV networks and other
programming businesses, including AMC, the Independent Film Channel,
Womens' Entertainment and regional sports channels.
Cablevision in September delayed the spinoff, saying it hoped to
complete the move by the end of the year. Last month, the cable-TV
company, based in Bethpage, N.Y., changed the plan again, saying it
would hand over $350 million in preferred interests to the new entity.
Cablevision initially had intended to hold on to redeemable
preferred-membership interests, and by giving those up, Cablevision
effectively reduced Rainbow's liabilities.
The Rainbow unit was a big driver of third-quarter results,
contributing $235.9 million in revenue, up 58% from the same period a
year earlier. But most of that bump came from advertising and an
increasing number of subscribers.
At the time of the September spinoff, many analysts and investors felt
the business plan for Voom was flawed, given the tough competition the
service faces from the two established satellite-TV companies, DirecTV
Group Inc. and EchoStar Communications Corp. A main reason to own
Rainbow was the inclusion of Cablevision's three successful cable
networks: AMC, WE and the Independent Film Channel. Analysts at the
time valued those networks at more than $1.37 billion -- or $4 to $5 a
Cablevision share.
But the value of the spinoff was expected to be less than that because
the satellite venture likely would eat up a good chunk of the
networks' earnings. Voom ended the third quarter with 26,000
customers, $5.9 million in revenue and a loss of $75.3 million.
In a conference call last month to discuss third-quarter earnings,
Cablevision Chief Executive Jim Dolan said the company didn't plan any
further near-term investment in Voom.
The Rainbow spinoff also would have taken the Clearview Cinemas
business out of Cablevision's hands.
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A WALL STREET JOURNAL ONLINE NEWS ROUNDUP
December 21, 2004 11:06 a.m. ET
Cablevision Systems Corp. said its board suspended plans to spin off
of Rainbow Media Enterprises and instead will pursue strategic
alternatives for the satellite and entertainment unit.
The board's decision, disclosed in a Securities and Exchange
Commission filing, didn't provide any additional details about
possible alternatives. It marked the latest twist in Cablevision's
roadmap for offloading the business, which operates the nascent
satellite-TV service Voom, as well as cable-TV networks and other
programming businesses, including AMC, the Independent Film Channel,
Womens' Entertainment and regional sports channels.
Cablevision in September delayed the spinoff, saying it hoped to
complete the move by the end of the year. Last month, the cable-TV
company, based in Bethpage, N.Y., changed the plan again, saying it
would hand over $350 million in preferred interests to the new entity.
Cablevision initially had intended to hold on to redeemable
preferred-membership interests, and by giving those up, Cablevision
effectively reduced Rainbow's liabilities.
The Rainbow unit was a big driver of third-quarter results,
contributing $235.9 million in revenue, up 58% from the same period a
year earlier. But most of that bump came from advertising and an
increasing number of subscribers.
At the time of the September spinoff, many analysts and investors felt
the business plan for Voom was flawed, given the tough competition the
service faces from the two established satellite-TV companies, DirecTV
Group Inc. and EchoStar Communications Corp. A main reason to own
Rainbow was the inclusion of Cablevision's three successful cable
networks: AMC, WE and the Independent Film Channel. Analysts at the
time valued those networks at more than $1.37 billion -- or $4 to $5 a
Cablevision share.
But the value of the spinoff was expected to be less than that because
the satellite venture likely would eat up a good chunk of the
networks' earnings. Voom ended the third quarter with 26,000
customers, $5.9 million in revenue and a loss of $75.3 million.
In a conference call last month to discuss third-quarter earnings,
Cablevision Chief Executive Jim Dolan said the company didn't plan any
further near-term investment in Voom.
The Rainbow spinoff also would have taken the Clearview Cinemas
business out of Cablevision's hands.
------------------------ Yahoo! Groups Sponsor --------------------~-->
$4.98 domain names from Yahoo!. Register anything.
http://us.click.yahoo.com/Q7_YsB/neXJAA/yQLSAA/EyMolB/TM
--------------------------------------------------------------------~->
Yahoo! Groups Links
<*> To visit your group on the web, go to:
http://groups.yahoo.com/group/VOOM/
<*> To unsubscribe from this group, send an email to:
VOOM-unsubscribe@yahoogroups.com
<*> Your use of Yahoo! Groups is subject to:
http://docs.yahoo.com/info/terms/
