Cablevision Systems, the New York-based cable and media company, on Tuesday said it would suspend plans to spin-off Rainbow Media Enterprises and instead explore ?strategic alternatives? for a loss-making high definition television service that has been dragging down the subsidiary's performance.
The change in strategy was cheered by investors, who pushed up Cablevision shares by 13 per cent on Tuesday on expecations that the company might unload the high-definition service, known as Voom, which has lost more than $200m this year.
Craig Moffett, the cable industry analyst at Sanford Bernstein, called the announcement ?welcome news?, estimating that Rainbow might contribute 50 per cent more to Cablevision's share price without Voom.
A company spokesman on Tuesday declined to comment on Cablevision's plans for Voom or Rainbow beyond the decision to halt the spin-off that was the subhect of a filing with the Securities and Exchange Commission.
Cablevision, controlled by the Dolan family, boasts 3m subscribers in the New York area, one of the most lucrative US markets.
The Rainbow subsidiary includes a group of networks - the Independent Film Channel, WE: Women's Entertainment and a 50 per cent interest in Fox Sports Net - in addition to Voom, a high-definition television service that is transmitted by satellite.
While the networks are profitable, Voom has worried many stock analysts. The service was launched in October 2003 as the Dolans bet on the emergence of high-definition television in the US.
Yet the business has managed to acquire just 26,000 customers since then while requiring a heavy investment to purchase, among other things, five new satellites.
Cablevision had delayed the Rainbow spin-off three times this year prior to Tuesday's announcement.
Mr Moffett, in a note to investors, predicted yesterday that any Voom sale might be followed by a decision by Cablevision to also unload Rainbow's networks to another media company, such as NBC Universal, Disney, Fox or Viacom, since their cash flow would no longer be needed to fund the satellite project.
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