As expected, Cablevision (NYSE: CVC) will return to a main focus on cable by spinning off its Madison Square Garden business. The MSG segment includes the New York Knicks and Rangers, the famed arena and several other New York City entertainment venues, MSG Entertainment, and cable networks MSG and Fuse.
BernsteinResearch analyst Craig Moffett likes the spin, telling clients in a note that “the separation of MSG removes a hard-to-value collection of assets from an overly complex balance sheet.” But New York sports fans may not like part of the deal: Jimmy Dolan will head the new business, too. More details below.
At the same time, Cablevision reported Q2 profits dropped 8.1 percent to $87 million, in line with analyst expectations. CVC got a slight win on the revenue side, up 9.8 percent gain to $1.88 billion when Thomson Reuters First Call analysts expected $1.87 billion (via RTT News).
|2Q 2009||2Q 2008||Analysts Estimates For 2009|
—MSG Spinoff: During the Q1 earnings call, Cablevision execs said they were considering a spin-off of the MSG unit. Now that the board has ratified that plan to create MSG as a separate company, the deal would be structured as a tax-free spin-off to Cablevision’s existing shareholders. The company expects to complete the transaction by end of the year. Following the spin-off, Cablevision President and CEO James Dolan would become executive chairman of the new, public Madison
Square Garden, while still retaining his current title at the cable company.
Other highlights from the quarter included:
—Cable TV net revenues were up 4.6 percent to $1.298 billion
—Basic video customers were down by 8,700 or 0.3 percent from March 2009 and down 38,000 or 1.2 percent from June 2008
—The Madison Square Garden unit’s net revenues slipped 0.9 percent to $207.3 million
—The Newsday segment, which in addition to the Long Island daily paper includes free commuter newspaper amNewYork, various Internet properties including Newsday.com; and Star Community Publishing, posted net revenues of $88.7 million, AOCF was $5.0 million. The Newday unit also experienced an operating loss of $2.6 million.
By David Kaplan