'Newsday' Parent Cablevision Mulls Spin-off of Units

By: Jeremy Herron Cablevision Systems Corp. said Tuesday it is considering options for its business that include a spin-off of at least one of the diversified cable operator's units.

The Bethpage, N.Y., company said it may also buy back stock and pay a special dividend.

The announcement comes a week after Chief Executive James Dolan said investors are "significantly" undervaluing the company. The Dolan family controls Cablevision through a special class of shares and has tried to take the company private several times in the past few years.

Its most recent attempt offered shareholders $36.26 per share, but that was rejected as too low in Oct. 2007. Cablevision shares rose 6.7 percent to $27.66 in early trading Tuesday.

Dolan said Tuesday the company is "actively looking" at options to close the gap between operating performance and the market value of its shares. The company plans to hire investment banking firms.

Cablevision did not say which of its businesses it would consider selling. Analysts consider its cable franchise, which serves the affluent New York suburbs, one of the best in the business. The unit is the country's fifth-largest cable system and accounts for 75 percent of company revenue. It includes high-speed Internet and phone services that have helped beat back competition from phone companies and satellite TV operators.

The company runs several cable television stations, including AMC, IFC and WE tv, as part of its Rainbow Media Holdings LLC unit.

The market for popular cable networks has been hot in recent months, with General Electric's NBC Universal paying $3.5 billion for Weather Channel and $875 million for women's programming channel Oxygen.

Cablevision also owns Madison Square Garden and the three sports teams that play there: basketball's New York Knicks and New York Liberty, and hockey's New York Rangers.

The company's other entertainment venues include Radio City Music Hall and the Beacon Theater, both in New York, and the Chicago Theater.

Cablevision is unlikely to sell newspaper publisher Newsday Media Group, following its $650 million purchase of Newsday from Tribune Co. The acquisition closed in July.

The company has paid a special dividend in past, returning $3 billion, or $10 per share, in cash to shareholders in 2006. The company took on debt to fund that dividend, which may not be an option now because of the credit crisis.