Fox/Liberty, Rainbow joined

Rainbow Media, a division of Cablevision Systems Corp., and Fox/Liberty Networks on Thursday completed their strategic alliance in a deal originally made in June.

The alliance between the entities creates a national and regional sports network that is being sold as a single multipronged service to advertisers.

To close the deal, Fox/Liberty Networks contributed $850 million to the venture for a 40% equity interest. Under the arrangement, Fox/Liberty owns Rainbow Media’s sports businesses and networks (presently operating under the SportsChannel banner) as well as Madison Square Garden (MSG) LP, which includes the New York arena complex, the NBA’s Knicks and NHL’s Rangers and the MSG Network.

The six regional SportsChannel networks operate out of New York, New England, Chicago, Florida, Ohio and Northern California.

Rainbow plans to use the proceeds from the deal to reduce its debt. It retains management control of the various networks.

Cablevision CEO James L. Dolan said Thursday in a statement, “This alliance represents a significant step forward in Cablevision’s overall financial strategy of reducing leverage and focusing on our core business. It also highlights and enhances the value of Cablevision’s key sports assets.”

Fox/Liberty Networks is a joint venture between News Corp. and Liberty Media Group, while Liberty Media is a unit of Tele-Communications Inc. Cablevision is the nation’s sixth-largest MSO, serving more than 2.9 million subscribers in 18 states and generating annual revenues in excess of $2 billion.

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