Cablevision Board Approves Rainbow Spin-off

After little less than a month of consideration, Cablevision’s board has decided to spin-off its Rainbow programming unit as a separate company. Rainbow houses Cablevision’s collection of programming networks, including AMC (which runs the buzz-worthy Mad Men series) IFC, the Sundance Channel, WE tv and Wedding Central. The spin-off is expected to be completed by the middle of next year, assuming it passes all the usual regulatory hurdles.

The spin-off will result in a refinancing of new debt tied to the creation of the new, separate Rainbow. Cablevision (NYSE: CVC) plans to use a portion of refinancing to repay approximately $1.25 billion of Cablevision and/or CSC Holdings, LLC debt.

The shares of the new company that emerges from the transaction would be split proportionally to all Cablevision stockholders. Holders of Class A common stock would get Class A shares in Rainbow. The same goes for Class B stockholders. Both Cablevision and Rainbow would continue to be controlled by the Dolan family through their ownership of Class B shares.

When the idea of spinning-off Rainbow was mentioned in November, Bernstein Research analyst Craig Moffett said that the divestiture would make Cablevision more saleable. Moffett didn’t say that necessarily meant the company was going to put itself on the block. But if it did entertain such thoughts, this would be a natural precursor. To pre-empt speculation on what would happen with Rainbow, in its earlier announcement, Cablevision said that it wasn’t thinking of selling Rainbow to another entity. And today, Cablevision reiterated that it is not considering the sale of Rainbow or its cable and telecommunications business. Release