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CABLEVISION GAINS 12.6% ON SPINOFF
June 3, 2003 -- Cablevision said yesterday it will spin out its fledging satellite TV business into a separate publicly traded company, fueling speculation the company will eventually sell-off the division.

Investors cheered the news, as it signaled Cablevision does not plan to spend wildly on trying to launch a national satellite television service to compete with DirecTV and EchoStar.

Cablevision said it will spend up to $564 million more on the sat-TV service, dubbed Rainbow DBS, putting an end to investor worries that the company was planning to spend billions on the business.

"The uncertainty discount for Cablevision stock has been eliminated," said David Joyce, an analyst at Guzman & Co.

Cablevision shares surged yesterday, closing up $2.43, or 12.6 percent, at $21.79.

Cablevision will spin off Rainbow DBS to Cablevision shareholders, and it will be run by Cablevision chairman and founder Chuck Dolan.

Also included in the spin-off will be Cablevision's Clearview Cinema chain, an admission the company has failed to find a buyer for the business.

The company purchased the chain in 1998 for $160 million, but it is worth far less today. Cablevision has sold a few properties for $27 million, and the rest of the business might fetch just $50 million, according to analysts.

Cablevision is expected to launch a satellite into orbit within the next couple of months, and to have the service operating later in the year.

Wall Street has long been skeptical of Cablevision's satellite ambitions, saying the company can't afford to spend the necessary billions to launch a viable competitor to EchoStar and DirecTV.