In Depth

Cablevision May Spin Off Madison Square Garden; Revenue Rises in First Quarter

Cablevision Systems said it exploring a spinoff of its Madison Square Garden business, a move that was praised by securities analysts.

“Even taken at face value, a spin off could release huge value,” said Craig Moffett, senior analyst at Sanford J. Bernstein, who notes MSG includes the New York Knicks and Rangers, regional sports networks, real estate and venues including Radio City Music Hall.

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Mr. Moffett also noted the possibility that the spinoff could also be a sign that the company’s founders, the Dolan family, might also be interested in keeping control of the MSG assets while being willing to divest everything else, including its cable systems and cable networks.

The MSG announcement was tucked into the end of Cablevision’s first-quarter earnings announcement.

The company posted net income of $20 billion, or 7 cents a share, compared to loss of $31.6 million, or 11 cents a share a year ago.

Revenues totaled $1.9 billion, up from $1.7 billion a year ago.

Cablevision’s Rainbow division, which includes the AMC, WE TV and IFC cable networks, reported first-quarter operating income of $38.8 million, up from $27.7 million a year ago. Revenues at the unit came to $249.3 million, up from $225.2 million.

Ad sales rose 7.6%, thanks mainly to higher ad sales at AMC, the company said.

“On virtually every dimension, Cablevision is a step ahead of the rest of the cable operators. It has higher penetration. A more technologically-advanced plant,” Mr. Moffett said. “Cablevision's first quarter results are another reminder why the rest of the industry would do well to learn everything they can from Cablevision's example.”

(Editor: Baumann)