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NEW YORK — Cablevision Systems is moving ahead with the previously announced plan to spin off its Rainbow Media cable networks and programming unit into a separate company, with its own stock, under a new name unveiled Thursday – AMC Networks.
The cable operator said that long-time Rainbow boss Josh Sapan will also serve as president and CEO of the company, which will include such networks as AMC, WE tv, IFC and Sundance Channel, after the spin-off, which is expected to be completed by mid-year.
The new firm will also include AMC/Sundance Global, the company’s international programming business; indie film business IFC Entertainment; and AMC Network Communications, a network programming origination and distribution arm.
The spin-off is subject to several conditions, including final approval by Cablevision’s board of directors. The Dolan family that controls Cablevision is scheduled to maintain control of the spun-off AMC Networks.
Cablevision previously spun off its sports and live event businesses in a similar fashion under the Madison Square Garden name. MSG shares have done well, and Cablevision and the Dolans hope to unlock additional shareholder value by putting the spotlight on the programming business by making it an entity that is separate from Cablevision’s cable systems. Rainbow has been focused on building the power of its channel brands with more original programming, such as AMC’s Mad Men.
The separation of Cablevision’s content and distribution assets also fits in with an industry trend of recent years that has included a spin-off of Time Warner Cable by Time Warner, among others. Only Comcast has run counter to that trend with its recent acquisition of NBCUniversal.
AMC Networks, not to be confused with movie theater operator AMC Entertainment, will join such cable networks firms as Discovery Communications and Scripps Networks Interactive that are also standalone companies with stock market listings.
Cablevision has repeatedly explored options for Rainbow over the years. The company in 2001 even made it into a tracking stock – a step away from fully spinning off the business – in an attempt to highlight its growth potential, but pulled the tracking stock after about 16 months.
When Cablevision first announced the plan to spin off its programming unit late last year, it also highlighted that the separate entities would have greater flexibility to pursue strategic objectives – a reference often used to indicate potential deals. The Dolans emphasized late last year though that they weren’t looking to sell their cable systems or programming assets after a spin-off.
The spin-off could still attract attention from media bankers and renewed deal chatter as Wall Street has over the years often speculated that the Dolans could sell parts of their businesses, and a separate stock listing for the programming business will put a market value on it.
“Cablevision typically wants a fat price, and there may not be a lot of potential acquirers who would be willing to pay up right now,” including the likes of Time Warner and Walt Disney, cautioned Wunderlich Securities analyst Matthew Harrigan. “And AMC likely will not be much in line with their branding strategies anyway. The best fit might be NBCUniversal,” but the company is likely to focusover the near- to medium-term on making the acquisition of a majority stake by Comcast work, he added.
Cablevision president and CEO James Dolan on Thursday lauded Rainbow boss Sapan. “Much of the success of Rainbow over the past quarter century is due in no small part to Josh Sapan. He has guided Rainbow’s growth for more than 20 years, overseeing the creation of some of the world’s most compelling television brands, and is the ideal executive to provide the leadership necessary as a new AMC Networks becomes a public company.”
Sapan explained the decision to change the name of the programming business. “Rainbow owns and operates some of cable television’s most admired networks, and over the past three decades, AMC has become one of the most established of those brands, recognized by consumers, advertisers and investors alike,” he said.
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