Cablevision shares are down 8.7% in early trading after the company reported anemic 2Q results. Net income at $87.8M was up 44.3% vs the same period last year on revenues of $1.69B, up 9.1%. But if you factor out the company’s recent acquisition of Bresnan Communications, the 2Q growth for cable TV — which accounts for 89% of Cablevision’s total revenues — would have been just 1.3% vs last year, not 9.8%. Further complicating comparisons is Cablevision’s recent spinoff of AMC Networks. (Cablevision accounts for income from AMC under ”discontinued operations,” not as a contributor to net revenues.) Still, analysts expected better: Earnings at 31 cents a share contrast with the 44 cents forecast. The Street also thought total revenues would come in higher at $1.87B. The subscription losses hurt: Cablevision said good-bye to 7% of its pay TV customers since March, ending 2Q with 3.28M. That likely will lead some analysts to wonder whether Cablevision has much room to grow. Its systems are concentrated in New York City suburbs and Long Island where Verizon and AT&T also are vigorously competing for TV subs. Even with broadband and phone subscriptions, Cablevision’s customer count fell 4.6% to 3.64M. Now that Cablevision has spun off AMC Networks it is “more focused than ever on the strength of our telecommunications business and on creating additional value for our customers and shareholders,” says CEO Jim Dolan.
Wall Street has high expectations for AMC Networks as it prepares to begin its new life Friday as an independent, publicly traded company. Most, and possibly all, of the analysts following the owner of AMC, IFC, WeTV and Sundance have a “buy” rating on the stock, which Cablevision Systems is spinning off and will trade on NASDAQ under the symbol “AMCX.”
The company’s going public as its biggest channel, AMC, enjoys a hot streak. Mad Men is bidding to become the first series since NBC’s The West Wing to win the Emmy for Best Drama Series for four straight years. If The Walking Dead and The Killing also are nominated, then AMC could become the first cable network to have three candidates in that category. Another AMC hit, Breaking Bad, isn’t eligible this year.
Maxim Group’s John Tinker says that AMC has “done an exceptional” job of commissioning original series as he projects that AMCX will hit $34 in 12 months. He’s concerned, though, that AMC won’t enjoy most of the financial rewards from its hits. For example, Mad Men producer Lionsgate owns the show’s syndication rights. Tinker also fears that AMC’s collection of older movies compete too directly with Netflix. Cable cord cutting “is here to stay,” he says.
The mind-numbing network of interlocking corporate relationships at Live Nation — the No. 1 concert promoter and owner of Ticketmaster — just became much more complicated with the announcement that Jim Dolan is joining its board of directors. He’s a power in live entertainment in his role as executive chairman of Madison Square Garden — a major owner of concert venues (Radio City Music Hall, The Beacon Theater, The Chicago Theater), sports teams (New York’s Knicks and Rangers) and media outlets (MSG network and music channel Fuse). Dolan’s also CEO of Cablevision Systems, a director of AMC Networks, and a Live Nation client in his role as lead singer and guitarist for blues band
It’s no surprise, but significant nonetheless: Cablevision’s board voted to approve the spin off of its programming arm, AMC Networks — which includes cable channels AMC, IFC, Sundance Channel, and We tv. It will go public at the end of the month. The big question: Will CEO Josh Sapan be able to focus on AMC business? Or will he be distracted by squabbles between AMC’s Executive Chairman Charles Dolan and his son, Jimmy, who’ll be on the board?
Here’s the release:
BETHPAGE, N.Y., June 6, 2011 – Cablevision Systems Corporation (NYSE: CVC) today announced that its board of directors has approved the leveraged spin-off of AMC Networks Inc., formerly known as Rainbow Media, to Cablevision shareholders. Following the spin-off, Cablevision Founder Charles F. Dolan will become executive chairman of the new, publicly-traded AMC Networks. Mr. Dolan will continue in his present role as chairman of Cablevision. The company announced earlier this year that current Rainbow chief executive officer Josh Sapan will become president and chief executive officer of AMC Networks.
The share distribution will occur on June 30, 2011 to Cablevision shareholders of record as of the close of business on June 16, 2011. In the distribution, each Cablevision Class A stockholder will receive one share of AMC Networks Class A common stock for every four shares of Cablevision Class A common stock they hold as of the record date. Each Cablevision Class B stockholder will receive one share of AMC
AMC’s parent Rainbow Media won’t be part of Cablevision anymore. After exploring a possible spin-off of its Rainbow Media division for the past couple of months, Cablevision Systems Corp. today announced it is proceeding with the spinoff after getting authorization from the board of directors. The spin-off is expected to be completed by mid-2011. “We are moving forward with the spin-off of Rainbow from Cablevision, which will create two distinct companies – one led predominantly by a premiere cable business and another that houses an attractive portfolio of successful programming assets,” Cablevision President and CEO James L. Dolan said. “We believe this will provide both Cablevision and Rainbow with greater flexibility to freely pursue their own strategic objectives and individual business plans, while allowing investors to more clearly evaluate each of the separate companies’ assets and future potential.” The new Rainbow’s assets will include:
- Cable networks AMC, WE tv, IFC, Sundance Channel and Wedding Central
- IFC Entertainment, which incorporates IFC Films, IFC Productions and the IFC Center
- Rainbow Network Communications, a full-service network programming origination and distribution company.
Remaining part of Cablevision are the cable and telecommunications businesses as well as newpaper Newsday, News 12 Networks, MSG Varsity and Clearview Cinemas.