Last week’s announcement that a top Rainbow Media Enterprises executive was jumping ship on the eve of Rainbow’s spinoff from parent Cablevision is renewing Wall Street’s doubts about the long-term prospects of the soon-to-be-spun-off satellite and content company.
Kathleen Dore, president of Rainbow’s entertainment services and the top executive managing cable networks AMC, IFC and WE: Women’s Entertainment, last Monday announced she is leaving Rainbow after 22 years to join Canada’s CanWest MediaWorks as president of radio and television. She starts Oct. 18 and will be based at CanWest’s Toronto headquarters.
“An opportunity like this comes along once in a lifetime,” Ms. Dore said. “To dramatically broaden the scope of what I do, I couldn’t say no.”
Ms. Dore’s departure comes at a particularly delicate time for Rainbow-and Cablevision, for that matter. The cable operator is in the midst of merging the three Rainbow cable networks Ms. Dore ran with Cablevision’s fledgling high-definition satellite business Voom and spinning off the combined entity into a separately traded company. Wall Street has been cool to the spinoff, with many analysts predicting the new company will fail in fairly short order, though they laud Cablevision’s decision to separate the cash-hungry satellite business from the core cable operations.
The process has not been easy, however. The proposed spinoff is taking shape against the backdrop of an investigation by the Securities and Exchange Commission into accounting practices at AMC that erupted in scandal last year and led the company to fire 14 Rainbow executives, including former AMC President Kate McEnroe. The probe has forced Cablevision to delay its planned spinoff of Rainbow, which had been slated to take place in the third quarter and is now expected to be completed sometime in the fourth quarter.
What’s more, just last month three Cablevision executives resigned for reasons not spelled out by the company. And though the company has stressed that the departures had nothing to do with the SEC investigation, some analysts are speculating the three executives’ leaving was a precursor to a settlement with the agency.
Now comes the resignation of Ms. Dore, a well-respected cable veteran who has been seen as a key figure in the growth of the three channels. Ms. Dore’s departure is bolstering the case of naysayers who predict the Rainbow spinoff will prove to be a failure and is raising questions as to whether Ms. Dore’s resignation is a commentary on the spinoff’s prospects.
“The timing is definitely odd,” one Wall Street analyst said.
Ms. Dore said that CanWest came to her and that she was not looking to bolt Rainbow.
“This was simply coincidental and not of my making,” Ms. Dore said, adding that with a deep bench of employees supporting her all these years, Rainbow “won’t miss a beat.”
A Rainbow spokeswoman declined to comment.