Cablevision Systems Plans Tracking Stock

Investors who want to bet on the financial performance of the New York Knicks and Rangers, the Rockettes and old movies on TV will get a chance to do so in mid-2000, Cablevision Systems Corp. said Wednesday.

That’s when the company expects to create a so-called tracking stock that breaks off the performance of its sports, film channel and entertainment businesses from that of its cable system operations.

Most of those businesses are part of Rainbow Media Holdings, a subsidiary that is 75%-owned by Bethpage, N.Y.-based Cablevision and 25% by NBC. Also, Fox Sports, which is part of Rupert Murdoch’s News Corp., is a partner in some Rainbow holdings such as Madison Square Garden, Fox Sports New York, the Knicks and Rangers.

Cablevision’s board authorized the creation of the tracking stock. Such stocks have become a popular way for companies to capitalize on their better-performing businesses and for investors to buy shares just in those things.

Some analysts, however, consider the practice to be gimmicky, because the tracking stock does not create a company that is separate from the parent or owned by shareholders.

“We continue to believe that Cablevision’s programming and entertainment assets have value that is not fully recognized by the marketplace,” said James Dolan, Cablevision’s chief executive.

He said the tracking stock could “provide an attractive new currency to generate continued growth.”

The company has yet to sort out which holdings would be part of the tracking stock, but they would almost certainly not include the New York Mets, which Cablevision is seeking to acquire.

Murdoch’s company owns the Los Angeles Dodgers, which would create a conflict should Mets be included in an entity that includes Fox as a partner.

Cablevision Chairman Charles Dolan is also bidding for the New York Jets, but that would be a personal rather than corporate acquisition. Charles Dolan said this week, however, that the football team could be managed by Cablevision’s Madison Square Garden.

In addition to the Garden and its basketball and hockey teams, the tracking stock would probably also include Radio City Entertainment; American Movie Classics; Bravo; Independent Film Channel; several News 12 cable channels; and the MSG Network, which carries New York Yankees games, among others.

Jessica Reif Cohen, a cable industry analyst at Merrill Lynch, said a separate Rainbow stock would be worth $20 per share today, or $27 per share if the assets were to be sold. She expects Cablevision stock proper to hit $94.

On Wednesday, Cablevision shares gained $1.69 to close at $77.25 on the New York Stock Exchange. The stock has risen more than 60% over the last year, although it is down from its May 12 high of $89.50.