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Private Gold at End of Rainbow?

Word that Cablevision Systems Corp. (NYSE: CVC) may again attempt to shed its Rainbow Media division for as much as $3 billion could portend “a more aggressive privatization of some or even all of the company,” suggests a top cable analyst.

The Cablevision topic reached the front burner Monday after the New York Post reported that the MSO has retained Bear Stearns to explore ways to enhance shareholder value. In addition to selling off Rainbow, which includes networks such as AMC, Independent Film Channel, and We: Women’s Entertainment, another option reportedly on the table is to expand through acquisitions that might fit into the company. Such potential targets reportedly could include “Websites, cable networks and music venues."

"We believe asset sales, not asset acquisitions, are not only preferable, but also much more likely,” Sanford C. Bernstein & Co. Inc. analyst Craig Moffett suggested in a note issued Monday.

Rainbow’s assets, he added, “would be significantly more valuable in the portfolio of a larger media company with greater negotiating leverage.”

The paper named News Corp. (NYSE: NWS) as a potential suitor for Rainbow.

If successful with this strategy, Cablevision may yet again try to take the company private and hope to be successful following four previous, failed attempts. Last October, shareholders voted down Cablevision’s bid to go private for $36.26 per share. (See Cablevision Shareholders Reject Dolan Bid.)

Cablevision shares have been trading well below that mark. Shares were up 39 cents (1.45%) to $27.00 in early trading Monday. Sanford C. Bernstein, which has long viewed the stock as undervalued, reiterated its Outperform rating and a target price of $45.

— Jeff Baumgartner, Site Editor, Cable Digital News

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