Cablevision Systems stock continued to slide Thursday after Pali Research media analyst Richard Greenfield issued a report claiming that the New York-centric cable operator is poised to invest heavily in live entertainment venues to bolster its Fuse music channel.
Greenfield, who slapped a “sell” rating on Cablevision Monday – which helped send the stock into a $1.28 per share tailspin that day to $25.03 – wrote in a research report March 6 that MSG Entertainment president Jay Marciano, speaking at an industry conference, basically confirmed that the operator is on the hunt for properties.
Cablevision shares dipped 60 cents each (2.5%) to $23.65 per share on Thursday. The stock is down nearly 12% since Feb. 29.
Marciano, speaking at the Billboard Music & Money Symposium in New York, apparently said that MSG Entertainment is planning to roll out music and live event theater venues nationwide, according to Greenfield.
Greenfield downgraded Cablevision from “buy” to “sell” March 3, primarily on speculation that the company, along with IAC/InterActiveCorp’s Ticketmaster, was pursuing a 49% interest in AEG Live, a live concert promoter. According to Greenfield, Cablevision would pony up about $150 million for 35% of AEG Live, with Ticketmaster contributing about $50 million for a 14% stake.
During its fourth-quarter conference call with analysts on Feb. 28, Cablevision CEO James Dolan left the door open for the company to expand its live entertainment assets, saying “..if there are good opportunities out there, we are going to be interested in looking at them.".
According to Greenfield’s report, Marciano said that while the company would promote its shows [like the "Christmas Spectacular"] to other theaters across the country, they would prefer to own both the venue and the actual production.
“We believe it is increasingly clear that Cablevision is planning to significantly expand its live entertainment business over the next couple of years,” Greenfield wrote. “This supports our sell rating, which is premised on CVC choosing to utilize its strong free cash flow for live-entertainment expansion, rather than buying back its stock or paying a dividend (or even simply paying down debt to fuel another go-private attempt).”
Cablevision already owns Madison Square Garden, The WaMu Theater, Radio City Music Hall and the Beacon Theater in New York. Late last year the company purchased The Chicago Theater in Chicago for an estimated $20 million.
Representatives from MSG Entertainment did not immediately return an e-mail for comment.
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