Rainbow, AT&T continue renewal talks

Analyst says Cablevision's Rainbow should have upper hand

NEW YORK -- Cablevision Systems's Rainbow Media networks unit should have the upper hand in its carriage renewal talks for its cable channels, including AMC, with AT&T's U-verse, according to an analyst.

AT&T didn't immediately yank the networks after a midnight deadline, and the two sides resume talks about continuing carriage of the channels, which also include IFC, Sundance Channel and WE.

"We would buy Cablevision (shares) on any pullback as we believe Cablevision's Rainbow has more negotiating leverage than does AT&T," said Collins Stewart analyst Thomas Eagan. "Not only do we see AMC et al as having less to lose if the channels lose U-verse affiliate fees for several months (compared to U-verse which could lose subscribers forever), but Cablevision's trading is not impacted by Rainbow results," but mainly by its cable systems.

Eagan also suggested that Cablevision may be willing to sacrifice Rainbow channels' carriage over the short-term "as it would impair U-verse" and its channel offering.