Cablevision fine-tunes spinoff plans

Updated SEC docs disclose funding of Rainbow, Voom

Cablevision may soon have its financing ducks sufficiently in line to proceed with the spinoff of its Rainbow Media satellite and cable programming division.

Company on Friday filed updated listing documents with the Securities and Exchange Commission which spell out how the company intends to fund the new Rainbow Media and Voom DBS entity.

Fulcrum analyst Rich Greenfield said the detailed breakout of the planned financing for Rainbow/VOOM suggests that Cablevision could roll out the financing imminently. Rainbow said it is lining up a $950 million credit facility and will issue some $800 million in debt.

The filing also spells out several key limitations on the debt and equity- raising efforts which restrict how much founder and chairman Chuck Dolan’s family can funnel from parent Cablevision into Rainbow’s high risk VOOM DBS platform.

Under the covenants of the listing, Rainbow will limit its capital commitment to the nascent VOOM service to $600 million (and $150 million in any one year). According to Greenfield, this “prevents VOOM from completely destroying the value of the existing cable networks (AMC, IFC and WE) that are part of the Rainbow/Voom spinoff and should boost investor confidence that a financing will get done.”

Such a restriction should go a long way toward easing investors’ concerns that parent company Cablevision would divert too much money into a “bottomless pit” of the start-up high definition DBS venture.

Voom currently has fewer than 10,000 subscribers to its 36-channel high-def service.

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