Steve Mehs
06-05-03, 04:20 AM
Wall Street is scrutinizing Cablevision's move to spin off its satellite TV assets, known as the Rainbow DBS venture.
Rainbow DBS controls a DBS license at 61.5 degrees, and is expected to launch its first satellite in July. As part of the planned spin off announced by Cablevision earlier this week, the company will provide the new entity with $450 million.
Fahnestock & Co. analyst Tom Eagan said he interprets Cablevision’s spin off announcement "to be an expensive way of separating itself from the satellite TV venture."
Eagan added, "We would prefer that the company let go of the license, limit its spending on the venture to the $170-190 million level we estimate the company has already spent, and re-direct spending to reducing its debt load."
Merrill Lynch's Jessica Reif Cohen said that in her view the Rainbow DBS spin off "eliminates a principal overhang on Cablevision shares as the company's satellite investment is now capped at $450 million. We believe this announcement will be positively embraced by the investor community as it provides a roadmap for the future of the company's DBS investment."
John Hill of SoundView Technology Group said Cablevision's leverage and overall use of capital have been concerns in the past. "Announcement of plans to spin off Rainbow DBS, the company’s planned satellite TV service, partially resolves these concerns," he said.
However, Hill added, "We expect that uncertainty over the fate of the Rainbow DBS satellite and potential service could disappoint investors who continue to hope Cablevision would sell more assets to further de-leverage."
This week, SoundView initiated coverage of Cablevision with a "neutral" rating.
From SkyReport (http://www.skyreport.com) (Used with Permission)
Rainbow DBS controls a DBS license at 61.5 degrees, and is expected to launch its first satellite in July. As part of the planned spin off announced by Cablevision earlier this week, the company will provide the new entity with $450 million.
Fahnestock & Co. analyst Tom Eagan said he interprets Cablevision’s spin off announcement "to be an expensive way of separating itself from the satellite TV venture."
Eagan added, "We would prefer that the company let go of the license, limit its spending on the venture to the $170-190 million level we estimate the company has already spent, and re-direct spending to reducing its debt load."
Merrill Lynch's Jessica Reif Cohen said that in her view the Rainbow DBS spin off "eliminates a principal overhang on Cablevision shares as the company's satellite investment is now capped at $450 million. We believe this announcement will be positively embraced by the investor community as it provides a roadmap for the future of the company's DBS investment."
John Hill of SoundView Technology Group said Cablevision's leverage and overall use of capital have been concerns in the past. "Announcement of plans to spin off Rainbow DBS, the company’s planned satellite TV service, partially resolves these concerns," he said.
However, Hill added, "We expect that uncertainty over the fate of the Rainbow DBS satellite and potential service could disappoint investors who continue to hope Cablevision would sell more assets to further de-leverage."
This week, SoundView initiated coverage of Cablevision with a "neutral" rating.
From SkyReport (http://www.skyreport.com) (Used with Permission)