Breaking up is hard to do

20 June 2005 By Rob Cox Follow @rob1cox

Cablevision is the latest to join the bandwagon by hiving off its media interests and taking its cable business private. Though these breakups are mostly a shell game, Cablevision’s governance problems might actually give a split greater merit.

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Cablevision Systems said its controlling family, the Dolans, plans to divide the company into two businesses, including a cable group that will be taken private by the Dolans and a publiclytraded media division.

Under the proposal, Charles Dolan would serve as chairman of the private cable business. His son James, with whom he has feuded, would become chief executive of Rainbow Media Holdings, which will aggregate cable networks AMC, IFC, WE and fuse, regional sports networks, the Madison Square Garden, the New York Knicks, the New York Rangers, Radio City Music Hall, News 12 and Clearview Cinemas.

Concurrent with the spinoff of Rainbow, with a value estimated by the Dolans of $12.50 a share, the public shareholders of Cablevision would receive $21 a share in cash in connection with a merger of Cablevision with an entity owned by the Dolan Family Group.

Cablevision said the transaction delivers an estimated value of $33.50 per share or an aggregate of $7.9bn to public shareholders, and implies an enterprise value for the company's telecom and cable businesses of $13.6bn.

After the completion of the transactions, the Dolan Family Group would own 100% of the Cablevision telecom and cable businesses and approximately 20% of Rainbow.

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