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Plucking the Garden

6:00 PM -- The big surprise from Cablevision's first-quarter earnings wasn't that it pulled in a profit and a revenue increase, but that the MSO's board has given Cablevision the OK to "explore" the spinoff of its Madison Square Garden (MSG) business -- a move that may rekindle speculation about the long-term future of its coveted cable assets. (See Cablevision Growing, But Slowing .)

The MSG unit includes the MSG building itself, the New York Knicks, the New York Rangers, the Fuse network, and Radio City Music Hall, among other assets.

Cablevision expressed interest last year in spinning off some non-core assets. (See Cablevision Spinning Options .) MSO execs declined to go into any further detail during this morning's earnings call, but Pali Research analyst Richard Greenfield speculated in a research note that the MSO's "trophy asset" could be worth just under $1 billion. Miller Tabak analyst David Joyce thinks it's worth much more, reportedly estimating MSG could be worth up to $1.5 billion.

The possibility of an MSG spinoff could re-spark the notion that Time Warner Cable Inc. (NYSE: TWC) could someday purchase Cablevision's cable assets and become larger, and get a much tighter grip on that high profile market.

"Even taken at face value, a spinoff could release huge value," Sanford C. Bernstein & Co. Inc. analyst Craig Moffett noted. "But the dream is perhaps the inverse reading... that spinning off MSG might alternatively be viewed as spinning off everything else."

But another analyst isn't buying into that notion completely, at least when the short term is concerned.

"While we do not believe CVC's core cable assets are for sale, separating out MSG will certainly make an acquisition of [the MSO] long-term easier, as it will remove the hardest value asset from within CVC," Greenfield wrote. "We continue to believe Time Warner Cable would buy CVC at a notable premium whenever CVC is put up for sale (with Comcast highly interested as well)."

— Jeff Baumgartner, Site Editor, Cable Digital News




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Jeff Baumgartner 12/5/2012 | 4:05:09 PM
re: Plucking the Garden

Cablevision's clarification on the possible future of the MSG assets:


http://www.lightreading.com/document.asp?doc_id=176547&site=cdn 

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