Cablevision Suspends Rainbow Media Spinoff

Cablevision Systems Corp. (CVC) is suspending its spinoff of Rainbow Media Enterprises (search) and plans to pursue strategic alternatives for the division's Voom satellite television service instead, the company said on Tuesday.

Cablevision shares jumped more than 8 percent in morning trading.

Analyst Theodore Henderson of Stifel Nicolaus & Co. said the decision likely was good news for investors because it meant that Cablevision could be poised to unload Voom (search), a high-definition satellite service that many observers have criticized as a drain on Cablevision's business.

The move suggests Cablevision is "not going to move forward with this business that over the last couple quarters has been a pretty significant cash drain," Henderson said.

Cablevision, which has more than 3 million cable television customers in the New York area, disclosed the suspension of the spinoff in a filing with the Securities and Exchange Commission (search).

It said it would pursue strategic alternatives for the Rainbow DBS business, which includes Voom, but gave no details.

A spokesman for Cablevision said the company would not comment beyond the filing. He declined to comment on whether strategic alternatives would include a sale.

Rainbow Media's other assets also include cable channels American Movie Classics and The Independent Film Channel, a variety of on-demand programming services and motion picture production and distribution businesses.

Earlier this month, Bethpage, New York-based Cablevision said the spinoff, originally announced in October 2003, would not happen by the end of this year as previously planned.

Analyst Craig Moffett of Sanford C. Bernstein said he views EchoStar Communications Corp. (DISH), a holding company that operates the DISH satellite TV network, as the most likely buyer for the Voom business. He estimated that the Voom satellite alone was worth about $250 million.

An EchoStar spokesman was not immediately available to comment.

Cablevision stock jumped $1.89, or 8.55 percent, to $24 on the New York Stock Exchange.