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Cablevision, TCI partners?
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March 27, 1998: 1:44 p.m. ET
Investors press TCI officials about expanding Cablevision partnership
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NEW YORK (CNNfn) - Cablevision Systems Corp.'s stock jumped Friday after investors raised the possibility that the Woodbury, N.Y.-based cable company could expand its partnerships with industry-leader, Tele-Communications Inc.
"I would not be surprised to see further strategic links between Liberty and Rainbow," said Stuart Rossmiller, media analyst at Deutsche Morgan Grenfell, referring to the two cable behemoths' programming operations -- Liberty Media Corp. and Rainbow Media Holdings Inc.
Over the last two days, investors attending TCI's annual analysts' conference in Colorado have prodded company officials to respond to speculation that Liberty Media's Encore and Starz networks will join forces with Rainbow Media, which owns networks such as Bravo, American Movie Classics and the Independent Film Channel.
"The next step may be a merger of their movie channels," Rossmiller said. "Bravo may fit in with the Starz/Encore portfolio of channels."
A spokesman for Cablevision declined to comment as a matter of policy.
TCI officials weren't immediately available. Liberty Chief Executive Dob Bennett and TCI Chairman John Malone declined to comment on questions at the investors' conference.
Cablevision stock (CVC) was up 2-1/2 at 132-1/2 in active trading on the American Stock Exchange. Meanwhile, TCI's stock (TCOMA) was down 21/32 at 31-3/32 and Liberty's shares (LBTYA) were down 1/8 at 33-7/16 in Nasdaq trading.
To be sure, Cablevision shares have been rocketing skyward in recent weeks amid optimism about its future prospects. The upbeat investors' sentiment was reinforced last week after an analyst at Goldman Sachs initiated coverage on the stock.
(Click to see historic stock activity)
Cablevision last year partnered with Liberty Media, when the TCI unit and News Corp. formed a joint venture to acquire 40 percent of Cablevision's sports programming assets.
Since then, Cablevision has agreed to rename its group of stations under the "Fox Sports Net" brand name. The sports network will reach 55 million households.
Neither TCI nor Liberty presently cooperates with Cablevision on the entertainment assets.
However, TCI has obtained a 33 percent interest in Cablevision, the parent entity, as of the end of February. The stake, representing 12.2 million class A shares, was issued as part of Cablevision's acquisition of 10 of TCI's New York-area cable systems announced last June.
And this minority stake gives TCI greater leverage and could lock out other possible partners such as Walt Disney Co., which could have utilized Bravo as a primary distribution for its Miramax studios unit, Rossmiller said.
"It (Bravo) would have worked wonderfully with Disney. But Disney's chance is probably lost ... Disney appears to be a day late and a dollar short," the analyst said.
-- by staff writer Robert Liu
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