Friday, May 8, 2009

Cablevision to Explore Madison Square Garden Spinoff

Will Cablevision spin off their Madison Square Garden businesses, including MSG, Knicks, and fuse? If you have heard about spin offs in the past, you aren't dreaming. This kind of speculation has been around for many many years. The closest they came was a tracking stock for Rainbow about a decade ago, but that was eventually re-ingested back into Cablevision.

For the public record, I once worked for Cablevision but have absolutely no inside information what they are planning to do. Still, if history is any guide, this speculation seems to be a regular occurrence and always seems to have the effect of raising the stock price. While Cablevision has recently been a buyer, having bought both Sundance and Newsday in the last year, the last time they sold something was when they sold Bravo in late 2002 to NBC.

A separation of companies has always been seen as a positive way to unlock the value of the assets. Others have speculated that it's Chairman is more interested in sports and music, than the cable business. Splitting the businesses would make it easier to get a truer market price on the cable side too with the opportunity to sell those assets to another cable company. Time Warner has always been desirous of owning the jewel of the NYC DMA, Long Island, which Cablevision runs. Cablevision continues to avoid further comment.

Will this be the time that Cablevision actually pulls the trigger on an asset spinoff? If history is a guide, don't hold your breath. It may simply be a means of pushing the stock price higher on news but not action. Still, anything is possible.

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