Cablevision Clearing Plate

Is Cablevision Systems (CVC Quote - Cramer on CVC - Stock Picks) throwing the baby out with the bathwater?

That's a question that Cablevision investors will have to figure out, following the New York-area cable operator's Thursday evening announcement that it's changing the terms of a satellite deal that's been in the works for months.

And giving them more news to puzzle over, Cablevision said Thursday that a major Cablevision investor was exercising its "put right" to sell back to the company the preferred stock he bought in Cablevision only a few months ago.

Cablevision's shares fell 7 cents in normal trading Thursday to close at $20.64, but fell 92 cents further amid the after-hours announcements.

Changing Course

Instead of simply spinning off its nascent direct broadcast satellite business dubbed Voom, Cablevision now says it will spin off a company that comprises not only Voom, but also three of its established programming channels: the AMC movie channel, the Independent Film Channel and WE: Women's Entertainment.

Rather than the $450 million cash contribution Cablevision had planned to make to the satellite company at the time of the spinoff, the company says it expects that the new entity -- slated to be spun out sometime next year -- will be able to finance its operations through the cash flow and borrowing power of its assets.

That being said, Cablevision says it will be spending $261 million on the satellite service this year, rather than the $193 million it had up until recently said was its satellite investment budget for the year.

Exactly how Cablevision investors should be regarding this deal isn't immediately clear.

On the one hand, skeptics of Voom -- and there are many of them on Wall Street -- might look at this deal as akin to dressing up a pig. Yes, one must admit, it comes with nice accoutrements, but it still smells. Voom, which Cablevision touts as the first multichannel programming service devoted to high-definition television, faces numerous obstacles, including well-established DBS competitors -- EchoStar (DISH Quote - Cramer on DISH - Stock Picks) and Hughes Electronics (GMH Quote - Cramer on GMH - Stock Picks) -- expensive consumer equipment and a spotty programming lineup.

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