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Cablevision spins off Rainbow Media

Hopes for pot of gold in separate tracking stock

NEW YORK — Cablevision systems posted a quarterly loss Tuesday and formally announced plans to spin off its Rainbow Media unit into a separate tracking stock in order to unlock the value of its programming assets and gain currency for future investments.

Cablevision CEO James Dolan said the company is hashing out a deal with the New York Yankees since the cabler and the ball club are in the last season of their current contract. “We continue to be in discussions with the Yankees regarding next season,” Dolan told investors during a conference call. “We are very much relating to each other and are hoping for a happy conclusion.”

But Yankees owner George Steinbrenner is reluctant to ink a new deal unless Cablevision, which has the right of first refusal, gives the Yanks an ownership stake in MSG. That’s the unit that houses Madison Square Garden, the NHL’s New York Rangers and the NBA’s New York Knicks.

Spinning off cable webs

These assets won’t be part of the Rainbow spinoff, which will focus on cable nets American Movie Classics, Bravo, Independent Film Channel, Romance Classics and Rainbow Sports, which manages six regional sports services. Rainbow Sports also holds 50% of Fox Sports Net — a group of 22 regional networks half owned and managed by News Corp.

The game plan is for the tracking stock to begin trading on the New York Stock Exchange under the symbol RMG during the fourth quarter. Cablevision shareholders will get two shares of the new stock for every Cablevision share.

Analysts have estimated the assets could be worth up to $5 billion, or $58 a share.

Cablevision owns 74% of Rainbow Media, with NBC holding 26%. The Peacock will have the right to swap that stake for 34% of the new tracking stock.

Cablevision also said net losses widened slightly to $172 million in the second quarter from $168 million the year before.

Revenue rose 14% to $1 billion. Cablevision, with about 3 million subscribers, a developing telephony business and a handful of other assets, swung to an operating income of $15.3 million from a $8.3 million loss the year before.

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