After decades of running Cablevision as a monarchy, the company’s founding Dolan family has finally capitulated to the wishes of investors. Sort of.
In conjunction with another strong earnings report yesterday, the Dolans said that Cablevision would explore the spin-off of its Madison Square Garden business, a move that paves the way for an eventual sale of its cable systems and Rainbow Media programming unit.
But then again, the Dolans have pursued spinning off assets before, only to retreat at the last minute.
“We’ve been down this road before with the Dolans,” said Gabelli & Co. analyst Chris Marangi. “We’ve said this is the beginning of the end many times before.”
Indeed, in 2004 the Dolans said they would spin off Rainbow, which includes cable networks AMC, IFC and WE tv, but then changed their minds. Last August, the family again said it would look at spinning off some assets but halted the process once the credit crisis set in.
The running thesis among Cablevision investors has been that if they spin off the MSG assets, the Dolans would retain supervoting control of the MSG business, which includes the New York Knicks and Rangers sports franchises, Radio City Music Hall and other concert venues, and the Fuse cable network.
Though the cable business is what made the family billionaires, CEO James Dolan’s heart resides in the music-focused assets housed within MSG — he moonlights as a singer and guitarist for the band JD and the Straight Shot.
That’s fine with investors, who have long wanted to cash out of their Cablevision investment via a sale. Featuring 3 million of the most affluent and tightly clustered subscribers in the country, as well as owning one of hottest cable networks around in AMC, a Cablevision sale would be one of the industry’s richest ever, with some analysts saying the company could get $40 per share or more in a deal.
Investors rejected an offer of $36.25 by the Dolan family to take the company private a few years ago because they felt they could get more in an auction. Cablevision shares closed up 82 cents to $19.15.
If an MSG spin-off comes to fruition, Cablevision investors may finally get the payday they’ve been waiting for.
“Separating out MSG will certainly make an acquisition of Cablevision long-term easier, as it will remove the hardest-to-value asset from within the company,” wrote Pali Research analyst Richard Greenfield in a report yesterday.
News of the potential MSG spin-off overshadowed another robust quarter for the company, with first-quarter revenue jumping nearly 11 percent to $1.9 billion despite increased competition from Verizon’s FiOS service. The company swung to a profit of $20.2 million, vs. a loss of $31.6 million a year ago. peter.lauria@nypost.com