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Cablevision board OKs new stock

Value estimated at $5 bil

NEW YORK — Chuck Dolan’s Cablevision Systems Corp. (CSC) said its board of directors has agreed to the setting up of a tracking stock for the company’s entertainment division.

Analysts have put a value of between $4.5 billion and $5 billion on Rainbow Media Holdings, the CSC subsidiary that shelters its programming assets such as Madison Square Garden, the N.Y. Knicks, the N.Y. Rangers, Radio City Entertainment and the cable networks American Movie Classics, Bravo, the Independent Film Channel and various regional news and sports channels.

Unanswered questions

Although the board has signed off on the tracking-stock strategy, CSC acknowledges that it will have to take more steps, and answer questions, including 1) how it will offer the stock (an IPO?, a spinoff?), 2) which programming entities will be included in the offering, and 3) when CSC will schedule a vote of its shareholders to approve the plan. CSC’s best guess is that what it calls “the new securities” won’t get issued before mid-2000.

“Cablevision has studied the tracking-stock idea for several years now,” said Dennis McAlpine, a showbiz analyst for Ryan Beck & Co. “The company is convinced that it’s not getting much benefit from the ownership of a substantial programming portfolio.”

But McAlpine said there are so many unanswered questions about the tracking stock that the Dec. 22 announcement barely moves the process along.

Shrinking operations

CSC is in the process of shrinking its cable system operations, concentrating them in the New York area. It has sold its cable systems in Cleveland, serving 311,000 subscribers, to Adelphia Communications. CSC has hired Bear, Stearns and Merrill Lynch to find buyers for its cable systems in Boston (reaching 354,000 subscribers) and in Kalamazoo, Mich. (49,000 subscribers).

CSC declined to comment on a report in the New York Daily News that it has offered more than $600 million to buy the New York Jets football team.

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