On the other hand, a spinoff of programming channels from a cable TV operator isn't a terrible idea. In fact, Cablevision has already done it itself: A few years ago, it spun off several cable channels into a tracking stock, Rainbow, which it subsequently reintegrated into the larger company.
More successful -- at least until 2000 -- was
Liberty Media (L Quote - Cramer on L - Stock Picks), a programming subsidiary that cable baron John Malone spun out of Tele-Communications Inc., a cable colossus bought by
AT&T (T Quote - Cramer on T - Stock Picks) and now part of
Comcast (CMCSA Quote - Cramer on CMCSA - Stock Picks).
Looking Smart
Investors might be heartened by the participation of Chuck Dolan, the cable veteran who founded Cablevision and now serves as its chairman. Dolan is expected to become chairman of the new entity. His son, James, already president of Cablevision, is expected to take on the chairman role as well at Cablevision following the spinoff.
While the elder Dolan has made plenty of smart decisions over the years -- for example, taking an early interest in cable TV in New York City and its environs -- he's also had a hand in some less compelling ones. In recent years, the company purchased the New York area consumer electronics chain The Wiz, in the hopes of creating synergies between the retail business and cable TV operations. The company recently closed the chain, however.
Cablevision also entered into the motion picture exhibition business by purchasing the Clearview Cinemas chain. But Cablevision has been trying to dispose of those assets as well.
Another piece of data to puzzle over is Cablevision's announcement Thursday night -- two hours after the spinoff press release -- that the private equity firm Quadrangle Group was exercising its right to sell back to the company $75 million in preferred stock that it purchased earlier this year. The purchase price is payable, at Cablevision's discretion, in cash or Cablevision common stock.
The managing principal of Quadrangle is Steve Rattner, a savvy media investor and former investment banker. Rattner joined Cablevision's board in March; Quadrangle's investment in Cablevision was first announced one year ago. Rattner couldn't immediately be reached for comment.
George Mannes
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