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Rainbow Media sale rumored

Liberty may buy Cablevision unit

Shares in Cablevision Systems jumped on Thursday as investors speculated that the New York-area cable operator may sell its Rainbow Media unit to John Malone’s Liberty Media.

Speculation was spurred by a Thursday story in the New York Post saying Malone was interested in Rainbow Media, which owns the AMC, IFC and WE: Women’s Entertainment cable networks.

Cablevision did not comment on any interest in selling its Rainbow unit.

Cablevision’s board of directors earlier this week turned down a $8.9 billion bid from its controlling shareholder, the Dolan family, to take the company private. That bid amounted to $30 per share.

The Dolans, who own 20% of Cablevision, had increased a previous bid of $27 per share.

Cablevision stock rose 2.7% on Wednesday, then soared 5.2% on Thursday to close at $30.77 a share.

In addition to the dominant cable system in New York, Cablevision owns interests in regional and national cable nets, Madison Square Garden arena, the New York Knicks and Rangers pro basketball and hockey teams, the Hartford Wolf Pack of the American Hockey League and the New York Liberty of the Women’s National Basketball Assn.

Liberty Media is in the process of taking control of satcaster DirecTV, which Malone obtained in an asset swap with previous majority owner News Corp. Some observers feel Malone will want a content supplier, such as Rainbow, once he’s in charge of DirecTV’s distribution system.

Others think a more likely candidate to take over all of Cablevision’s assets is Time Warner Cable, which owns complementary cable systems and has sibling companies that generate content.

Rainbow Media alone would be expected to fetch between $2.5 billion and $4 billion.