Bethpage, NY, August 9, 2000 – Cablevision Systems Corp. (NYSE:CVC) today announced that it has filed preliminary proxy materials with the Securities and Exchange Commission describing a series of Cablevision common stock to be called Rainbow Media Group, which will track the performance of certain programming assets held by Rainbow Media Holdings, Inc.
The Rainbow Media Group tracking stock will be issued in two series, mirroring Cablevision’s equity composition with both a Class A and Class B of common shares. When issued, the Class A stock is expected to be listed on the New York Stock Exchange under the symbol RMG. The distribution of the tracking stock to holders of Cablevision common stock is currently expected to be at a ratio of one RMG share for every two shares of CVC held.
The new securities will enable investors to follow more directly the separate economic performance of certain Rainbow Media Holdings, Inc. programming assets including American Movie Classics, Bravo, The Independent Film Channel, Romance Classics, MuchMusic USA, and Rainbow’s interest in the national service FOX Sports Net and six FOX regional sports channels. The company indicated that certain of its New York assets including the Madison Square Garden properties, News 12 Networks and MetroChannels will remain as components of Cablevision (CVC) stock.
“Over the past 20 years Rainbow has established itself as a leader in national and regional niche programming,” said James L. Dolan, Cablevision’s president and CEO. “The Rainbow Media Group stock provides an attractive vehicle to help unlock the value inherent in Rainbow’s assets – a strategic objective which has been at the core of Cablevision’s business planning.”
In connection with the tracking stock issuance, Cablevision has agreed to permit NBC, which currently owns 26 percent of the common stock of Rainbow Media Holdings, Inc., to exchange, over time, its interest in Rainbow Media Holdings, Inc. for 34 percent of the shares of the Rainbow Media Group tracking stock. Issuance of the tracking stock is subject to the approval of Cablevision’s board of directors and shareholders.
Highlights of the operations that will comprise Rainbow Media Group include:
American Movie Classics
American Movie Classics (AMC), launched in 1984, is the nation’s first and leading classic film channel. AMC is one of the top basic cable services in the United States based on its audience reach — approximately 73 million households representing more than 90 percent of America’s cable homes. AMC features classic, unedited, uncolored films produced between the 1930s and 1980s, and produces a diverse blend of original programming, including series, specials and mini-documentaries, that are designed to provide insight into the golden age of Hollywood.
In the second quarter of 2000, AMC reported net revenues of $48.2 million, an increase of 9 percent from the second quarter of 1999, and operating cash flow growth of 25 percent to $25.1 million.
Bravo is the home to creativity on television, and the first service dedicated to film and the performing arts. Launched in December 1980, Bravo is now available to 57 million households – an increase of 66 percent over the past two years. Its schedule features original programming, feature films, theater, dance, music and documentaries. Bravo’s critically-acclaimed original programming includes Inside the Actors Studio, Bravo Profiles and The Awful Truth.
In the second quarter of 2000, Bravo reported net revenues of $25.5 million, an increase of 39 percent from the 2nd quarter of 1999, and operating cash flow growth of 36 percent to $7.9 million.
The Independent Film Channel
Rainbow’s The Independent Film Channel (IFC) is the first program service dedicated to films developed outside of the Hollywood studio system. IFC was launched in 1994 with the support of its Advisory Board, which includes Martin Scorsese, Robert Altman, Spike Lee, Tim Robbins, Joel and Ethan Coen and Jodie Foster. Through its IFC Productions, IFC also provides funding for director-driven independent feature films, most notably, the Emmy-Award winning Boys Don’t Cry directed by Kim Pierce.
In the second quarter of 2000, IFC reported net revenues of $6.7 million, an increase of 52 percent from the second quarter of 1999, and subscriber growth of 52 percent, to 40 million households.
To meet the need for quality women’s programming, Rainbow launched Romance Classics in 1997 as a 24-hour network providing “time out” television for women. The network reaches 33 million households, an increase of 61 percent since the end of 1998. Romance Classics features popular films and original lifestyle series regarding issues that are important to women including family, relationships, romance, and well-being. Original series and specials include Cinematherapy, Tea with Fi, Everyday Elegance with Colin Cowie, Cool Women and Style World.
Launched in the United States in 1994, MuchMusic USA reaches 18 million households with an all-music-all-the-time format including original television shows, live concerts, and broadband content. MuchMusic USA’s lineup reflects an increasing focus on localized, multi-platform programming. Rainbow recently announced that it has assumed full ownership of MuchMusic USA from Chum Ltd.
The RMG tracking stock will include Rainbow Media Holdings, Inc.’s interest in Rainbow Sports, which manages regional sports services in six of the nation’s leading sports markets, delivering “home team” sports to more than 18 million households. These networks are located in San Francisco, Chicago, Cincinnati, Florida, New England and Greater Cleveland, Ohio. Rainbow Sports also includes Rainbow’s 50 percent interest in the national sports and news service FOX Sports Net which reaches 70 million households nationwide by linking 22 regional sports networks, including the six FOX Sports Net networks managed by Rainbow Sports. News Corporation owns the remaining 50 percent interest in FOX Sports Net and manages the service.
In addition to the services detailed above, RMG will include: Rainbow Network Communications, a full service network programming origination and distribution company; Rainbow’s 50 percent interest in National Advertising Partners, which provides advertising representation services for FOX Sports Net; IFC Films which is responsible for all film content utilized by Bravo and IFC, including licensing, production of original specials, series and feature films, and film distribution; and Sterling Digital, an entity which will develop new niche audience programming.
No solicitation is being made hereby and such a solicitation will only be made following the mailing of definitive proxy materials to Cablevision shareholders.
The preliminary proxy materials filed with the Securities and Exchange Commission state that Rainbow Media Group tracking stock may be issued following a favorable shareholder vote, but there are no assurances that an issuance will be made or as to the manner in which an issuance may be accomplished. In addition, Cablevision may change the composition of the Rainbow Media Group prior to the mailing of definitive proxy materials. Investors and potential investors should, therefore, rely only on the definitive proxy materials in reviewing the businesses, financial condition or results or operations of the Rainbow Media Group.
A Cablevision tracking stock, such as the Rainbow Media Group common stock that may be issued after a Cablevision shareholder vote, represents an interest in Cablevision and is not a direct interest in the businesses and interests included in the Rainbow Media Group. If the Rainbow Media Group tracking stock is issued, dividends (if any), entitlements in the event of a merger or similar transaction and rights in liquidation will not necessarily be related to the performance of the Rainbow Media Group or the value of the assets in the Rainbow Media Group. Instead, the Cablevision Board of Directors will make such determinations, subject to the provisions of the Cablevision charter. There are not expected to be dividends on any series of Cablevision common stock for the foreseeable future.
In connection with the preparation of the financial information for the Rainbow Media Group tracking stock, the Company has made certain cost allocations of Cablevision costs based on existing policies. If Cablevision were to alter those policies, which it is entitled to do at any time, there could be material adverse effects on the Rainbow Media Group financial statements. Investors and potential investors should consider this factor in analyzing the financial information set forth above.
Cablevision Systems Corporation is one of the nation’s leading entertainment and telecommunications companies. Its cable television operations serve more than 3.4 million households located primarily in the New York metropolitan area. The company’s advanced telecommunications offerings include its Lightpath integrated business communications services and its Optimum-branded high-speed Internet service. Cablevision’s Rainbow Media Holdings, Inc. subsidiary owns and operates programming businesses including American Movie Classics, Bravo and many other national and regional services. Cablevision also owns a controlling interest and operates Madison Square Garden and its sports teams including the Knicks, Rangers and WNBA Liberty. The company operates New York’s Radio City Music Hall as well as Clearview Cinemas in the Tri-State area. Cablevision also owns and operates The Wiz consumer electronics chain at 41 locations in the New York Metropolitan area. Additional information about Cablevision Systems Corporation is available on the Web at www.cablevision.com.
This release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties, and that actual results or developments may differ materially from those in the forward-looking statements as a result of various factors, including financial community and rating agency perceptions of the Company and its business, operations, financial condition and the industry in which it operates and the factors described in the Company’s most recent Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission and the Company’s registration statement on Form S-3, including the section entitled “Risk Factors” contained therein. The Company disclaims any obligation to update the forward-looking statements contained herein.
Senior Vice President
Media and Community Relations
Frank J. Golden
Senior Vice President