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Rainbow Spinoff Plans Could Emerge Soon

Cablevision Systems Corp. could issue an announcement as early as this month regarding its plans to issue a tracking stock for its Rainbow Media Holdings Inc. programming arm.

"We are concluding our negotiations with AT & T [Corp.] and NBC, and we do expect by the end of the month to make an announcement as to which properties will be included in the Rainbow tracker," Cablevision vice chairman William Bell said in a conference call with analysts regarding the MSO's first-quarter financial results.

He added that the company is on track to issue the tracking stock late this summer.

Rainbow-a partnership between Cablevision, Liberty Media Group, News Corp. and NBC-owns programming assets such as American Movie Classics, Romance Classics, The Independent Film Channel and Bravo. It also owns regional sports networks, Madison Square Garden and the New York Knicks and New York Rangers professional-sports teams.

The Rainbow unit reported strong results for the quarter, with pro forma adjusted operating cash flow up 69.6 percent to $47 million and revenue up 16.2 percent to $361.5 million.

Overall, Cablevision reported revenue and cash-flow growth of 12 percent and 14 percent, respectively, due mainly to growth in new services.

Revenue for the first quarter was $957.2 million, up from $857 million last year. Operating cash flow was $219.5 million, compared with $193 million in 1999.

In the cable operations, revenue was up 6.5 percent to $432.1 million and operating cash flow increased 10 percent to $193.2 million. Subscriber growth was 2.4 percent in the period, reaching 2.8 million in the New York metropolitan area.

Subscribers for Cablevision's "Optimum TV" advanced-analog service rose by 51,750 to 552,725 in the period. Customers for its "Optimum Online" high-speed-data service increased more than four times to 70,509. Residential telephony customers were also up in the period to 10,175 from 2,933 in the same period last year.

"The strong first-quarter results are solid evidence of the continuing health of our core businesses and the growth potential of our new revenue streams," Cablevision CEO James Dolan said in a prepared statement.

"This excellent performance comes at the same time that we are concentrating our resources on maximizing opportunities in the New York market," he added. "Our pending cable-property sales will give us the financial flexibility to capitalize on new revenue possibilities as we introduce our new digital platform in the tristate area."

In the past six months, Cablevision agreed to sell systems with about 716,000 subscribers in Boston, Cleveland and Kalamazoo, Mich.