It’s no surprise, but significant nonetheless: Cablevision’s board voted to approve the spin off of its programming arm, AMC Networks — which includes cable channels AMC, IFC, Sundance Channel, and We tv. It will go public at the end of the month. The big question: Will CEO Josh Sapan be able to focus on AMC business? Or will he be distracted by squabbles between AMC’s Executive Chairman Charles Dolan and his son, Jimmy, who’ll be on the board?
Here’s the release:
BETHPAGE, N.Y., June 6, 2011 – Cablevision Systems Corporation (NYSE: CVC) today announced that its board of directors has approved the leveraged spin-off of AMC Networks Inc., formerly known as Rainbow Media, to Cablevision shareholders. Following the spin-off, Cablevision Founder Charles F. Dolan will become executive chairman of the new, publicly-traded AMC Networks. Mr. Dolan will continue in his present role as chairman of Cablevision. The company announced earlier this year that current Rainbow chief executive officer Josh Sapan will become president and chief executive officer of AMC Networks.
The share distribution will occur on June 30, 2011 to Cablevision shareholders of record as of the close of business on June 16, 2011. In the distribution, each Cablevision Class A stockholder will receive one share of AMC Networks Class A common stock for every four shares of Cablevision Class A common stock they hold as of the record date. Each Cablevision Class B stockholder will receive one share of AMC Networks Class B common stock for every four shares of Cablevision Class B common stock they hold as of the record date.
Cablevision President and CEO James L. Dolan stated: “With today’s board action, we are one step closer to creating two distinct companies for investors. Rainbow today houses some of cable television’s most admired networks, while Cablevision’s portfolio of industry-leading telecommunications services and local content offerings has made it one of the nation’s leading media and telecommunications companies. We are confident that both the new AMC Networks and Cablevision will continue to build on their considerable records of achievement.” In addition to his role as Cablevision President and CEO, James Dolan will also serve on the new AMC Networks’ board of directors.
Charles Dolan, who will serve as executive chairman of the new AMC Networks, is the founder and chairman of Cablevision Systems Corporation, one of the nation’s leading telecommunications, media and entertainment companies. The company’s Rainbow Media business, which will become AMC Networks, was founded as a Cablevision subsidiary in 1980 and includes popular programming networks AMC, IFC, Sundance Channel and WE tv. Mr. Dolan also serves on the board of The Madison Square Garden Company, a former Cablevision subsidiary, which was spun-off as a separate public company in early 2010.
Fractional shares of AMC Networks common stock will not be distributed to Cablevision stockholders. Instead, they will be aggregated and sold in the public market, with the net proceeds distributed pro rata in the form of cash payments to stockholders who otherwise would be entitled to a fractional share of AMC Networks common stock.
No action or payment is required by Cablevision stockholders to receive the shares of AMC Networks common stock. Stockholders who hold Cablevision common stock as of the record date will receive a book-entry account statement reflecting their ownership of AMC Networks common stock or their brokerage account will be credited with the AMC Networks shares. An Information Statement containing details regarding the distribution of the AMC Networks common stock, related financing and AMC Networks’ business and management following the AMC Networks spin-off will be mailed to Cablevision stockholders prior to the distribution date.
The transaction has been structured to qualify as a tax-free distribution to Cablevision stockholders for U.S. federal income tax purposes. Cash received in lieu of fractional shares, however, will generally be taxable. Cablevision stockholders are urged to consult with their tax advisors with respect to the U.S. federal, state, local and foreign tax consequences of the AMC Networks spin-off.
Shares of Cablevision Class A common stock will continue to trade “regular way” on the New York Stock Exchange (“NYSE”) under the symbol “CVC” through the distribution date of June 30, 2011 and thereafter. Any holders of Cablevision Class A common stock who sell Cablevision shares regular way on or before June 30, 2011, will also be selling their right to receive shares of AMC Networks Class A common stock. Investors are encouraged to consult with their financial advisors regarding the specific implications of buying or selling Cablevision Class A common stock on or before the distribution date. Cablevision’s Class B common stock is not listed on a securities exchange.
AMC Networks Class A common stock is expected to begin trading on a “when-issued” basis on NASDAQ under the symbol “AMCXV” beginning on June 16, 2011. On July 1, 2011, when-issued trading of AMC Networks Class A stock will end and “regular-way” trading under the symbol “AMCX” will begin. The CUSIP number for the AMC Networks Class A stock will be 00164V 103 when regular-way trading begins. AMC Networks Class B common stock will not be listed on a securities exchange. AMC Networks will be controlled by the Dolan family through their ownership of Class B shares.
As part of the leveraged spin-off, AMC Networks will incur approximately $2.43 billion of new debt, consisting of $1.73 billion aggregate principal amount of senior secured term loans and $700 million aggregate principal amount of senior unsecured notes. Proceeds from the financing will be used to repay all outstanding AMC Networks debt and approximately $1.25 billion of Cablevision and/or CSC Holdings, LLC debt.
The completion of the AMC Networks spin-off is subject to the effectiveness of AMC Networks’ Form 10 filed with the Securities and Exchange Commission (“SEC”), the AMC Networks common stock being authorized for listing on the NASDAQ and the finalization of the AMC debt financing. The board of directors reserves the right to modify or abandon the distribution at any time prior to the distribution. Cablevision and AMC Networks expect the conditions to the AMC Networks spin-off to be satisfied on or before the distribution date.
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