Cablevision Considers Spinning Off Rainbow Programming Division

Cablevision’s board has given the company the okay to explore spinning off its Rainbow unit as a separate company. But the cable operator is clear about one thing going forward: it is not selling Rainbow, which house Cablevision’s collection of programming properties, including AMC (home of the buzz-worthy Mad Men, which just wrapped up its season earlier this month, as well as IFC, the Sundance Channel, WE tv and The Wedding Central.

The Rainbow division had a pretty good Q3, as revenues rose by 12 percent to $291.4 million, while AOCF was up 12.2 percent to $96.4 million. The division’s operating income was also very healthy, growing 18.1 percent to $63.0 million, all compared to the prior year period.

The move comes several months after Cablevision (NYSE: CVC) spun off its MSG property. If it does separate from Rainbow, Cablevision would still have its main cable and telecom subscription business, as well as Newsday, News 12 Networks, MSG Varsity and Clearview Cinemas.

If Cablevision does go through with the divestiture of Rainbow, it probably wouldn’t happen before the middle of next year. Release

Updated: Despite Cablevision’s hope to pre-empt speculation about selling Rainbow, Bernstein Research analyst Craig Moffett said that the announcement does have M&A implications for both entities. Although unlikely, Time Warner Cable (NYSE: TWC) or some other rival would probably take a look at taking over Rainbow. More importantly, after divesting itself of Rainbow, Cablevision itself would be more “saleable,” Moffett suggested. In any case, sales of Cablevision’s assets such as Rainbow will be more likely as ownership of the company passes through successive generations of the Dolan family, which controls the cable operator.