NEW YORK ( TheStreet) -- Cablevision Systems ( CVC) said it's preparing to spin off its Madison Square Garden assets.

The news sent the company's shares spiking by almost 9% to $20.85 in morning trading Thursday.

The assets being spun off would include the Madison Square Garden arena, the New York Knicks basketball team, the New York Rangers hockey team, Radio City Music Hall and two New York-area sports TV networks.

Stockholders would receive one share of the new company, which would be called Madison Square Garden, for every share of Cablevision they own. The spin off is expected to be complete by the end of the year.

Cablevision said James Dolan, its chief executive, will also take on the role of executive chairman of the spun-off Madison Square Garden group. Hank Ratner, Cablevision's vice chairman, will add the titles of president and CEO of the new company.

The separation of its Madison Square Garden is expected to benefit investors, allowing each segment to operate as a distinct business, Cablevision said. Without a spin-off or sale, cable investors buying shares of Cablevision have little choice but to contend with its sports and entertainment businesses.

Investors had been prepared for the spin-off ever since Cablevision hinted at shifting its Madison Square Garden assets back in May.

Cablevision also reported on Thursday an 8% drop in its second-quarter earnings, even as revenue climbed.

During the quarter the company earned $87 million, or 29 cents per share, in-line with analysts' expectations. This compares with a profit of $94.7 million, or 32 cents a share, a year ago.

But sales rose 10% to $1.88 billion.

-- Written by Jeanine Poggi in New York. Joseph Woelfel contributed to this report.
Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.

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