Don Draper and the rest of the Mad Men could buy an awful lot of martinis for $4.7 billion.That’s the high end of the valuation Miller Tabak + Co. analyst David Joyce puts on Rainbow Media Holdings, parent company of AMC, the network that airs Mad Men. Cablevision Systems on Thursday morning said its board authorized looking into spinning off Rainbow.
Joyce figures that Rainbow is worth between $2.9 billion and $4.7 billion, with AMC valued at about $1.7 billion, IFC worth $856.4 million, WE worth $880.5 million and Sundance Channel $496 million. (Rainbow also carries about $1.2 billion in debt.)
The valuation for AMC is certainly much higher now than it would have been a few years ago when the network aired only old movies. Now it’s home to some of the most critically acclaimed shows on TV, including Breaking Bad and the new Walking Dead, in addition to Mad Men.
“Roughly 10 years ago, these assets had been spun out into a tracking stock, then bought back in within a couple of years; there have also been industry discussions about sale potential of these assets from time to time in the past,” Joyce said in a research note. “We believe these assets are performing at their historical best at this point, so there is a scale to Rainbow now that could make standalone valuation relatively attractive. Highlighting these assets could help their valuation and also make CVC a pureplay cable distribution company.”
The stock market seemed to like the spinoff idea. Cablevision shares were up $2.33 to $31.26 at mid day.