The bills are already mounting at Cablevision's (CVC) satellite venture.
The Long Island-based cable TV system operator said it was giving up plans to hold $350 million in preferred securities of Rainbow Media Enterprises, the satellite TV and programming subsidiary that Cablevision is in the process of spinning off.
The decision, Cablevision said Monday, "was made in light of expected increases in the financing requirements of Rainbow Media Enterprises."
Shares in Cablevision, which is slated to report third-quarter results Tuesday, fell 88 cents, or 4%, to $20.21.
The modification of the spinoff on terms less favorable to Cablevision spotlights the financial challenges facing Rainbow. One of Rainbow's key assets is the fledgling high-definition television satellite service Voom. That start-up faces the steep uphill battle of competing with well-established satellite rivals
. About the nicest thing that Wall Street analysts have been able to say about Voom up until Monday is that Cablevision's exposure to its losses has been limited.
Rainbow -- which Cablevision originally had expected to be spun off by the end of September -- also will be the parent company of the American Movie Classics, the Independent Film Channel and WE: Women's Entertainment programming services, along with the Clearview Cinemas movie theater chain.
going to happen,"
Cablevision CEO Jim Dolan told investors in late September. "We believe we are very close to actually achieving the spin."
Though Voom is Rainbow's most obvious cash drain, Cablevision's new
Securities and Exchange Commission
filing doesn't specify where within Rainbow Media that financing requirements are expected to increase. The redeemable preferred membership interests at issue, according to Cablevision, relate to the entity that owns Rainbow's AMC and WE services.
A Cablevision spokesman declined to comment Monday.
In July, Fulcrum Global Partners analyst Richard Greenfield noted that financing covenants for Rainbow
limited the amount of money the company could spend on Voom in the absence of subsequent financing.
In its annual report filed in March, Cablevision said that funding needs for the satellite business were expected to total $399 million through the date of the spinoff, then expected by the end of the third quarter. Of that amount, $237 million would be in the form of a Cablevision investment in Rainbow, the company said.
Cablevision management likely will be discussing the financing change on its scheduled conference call with analysts Tuesday. For the third quarter ended Sept. 30, analysts surveyed by Thomson First Call are forecasting a loss of 35 cents a share on revenue of $1.15 billion. Earnings before interest, taxes, depreciation and amortization are expected to reach $320 million.