A Voom-less Cablevision ( CVC) got a nod of approval from Wall Street Wednesday afternoon.
CIBC World Markets upgraded the Long Island-based cable operator from a rating of sector underperformer to sector performer, citing Cablevision's Dec. 21 disclosure that it is suspending the spinoff of its Rainbow Media Enterprises subsidiary and seeking "strategic alternatives" for Voom, its fledgling high-definition television satellite service. The upgrade reflects Wall Street's ongoing skepticism about the prospects for Voom, as well as confidence in Cablevision's core businesses of operating New York area cable TV systems and various programming channels. Shares in Cablevision -- which issued a press release Thursday trumpeting the expansion of Voom's programming lineup -- rose 30 cents Thursday to trade at $25.22. With Cablevision shares up more than 14% from when the company announced the RME and Voom developments, CIBC analyst Cannon Carr says he believes the market has priced in "rational upside" from RME's programming assets and the sale or shutdown of Voom. Carr says he believes a shutdown is most likely, adding about $2 per share of incremental value -- an opinion that exemplifies Wall Street's view that Voom is worth more dead than alive. Carr assigns a $28 price target to Cablevision. As for the rest of Cablevision, Carr says he believes the company's strong performance in the third quarter of 2004 will continue into 2005. The company has benefited from the popularity of its "triple play" bundle of video, telephony and Internet access, says Carr, and the key question is whether the company can raise prices on its service bundles without suffering a meaningful increase in the percentage of subscribers who drop services.