Cable television and telecommunications company Cablevision (NYSE:CVC) recently announced second-quarter net income was $222 million, for earnings of $0.77 a share, compared with a net loss of $187.1 million at this time last year. While this may seem like stellar news, it doesn't fare nearly as well when viewed with the reality that $332 million of revenue was due to a one-time gain from discontinued operations in some of its sports and direct satellite broadcasts. The blessing in this deal, according to some analysts, is that it resulted in Cablevision gaining exclusive ownership of Madison Square Garden.

The earnings report is misleading, though. Revenue has declined extensively at Rainbow Media, Cablevision's programming unit that includes the AMC, IFC, and WE networks. This problem is likely to be compounded by a legal dispute between Time Warner (NYSE:TWX) and AMC that has forced Cablevision to renegotiate subscriber fees. Owing largely to Rainbow Media, the company ended the second quarter with an operating loss of $8.3 million and a drop in operating cash flow of more than $30 million.

Charles F. Dolan, Cablevision's controlling shareholder, hopes to use this opportunity to take the company private through a spinoff of Rainbow Media. His offer includes $21 per share in cash and $12.50 worth of stock in Rainbow Media. This reaction may be in part due to speculation that Time Warner may be interested in acquiring a stake in Cablevision.

To me, the spinoff represents an inherent contradiction, however. By spinning off Rainbow Media, Dolan would lose not only the ailing cable networks, but Madison Square Garden as well. This is not consistent with the view championed above: If Madison Square Garden is such a jewel, then why would the company be willing to part with it so easily?

What Dolan likely realizes is that for all its reputation and grandeur, Madison Square Garden does not bring in the bucks it used to. In the last year, its revenues were down 3%.

Nevertheless, Cablevision does have some strengths. The company's digital phone service, for example, attracted 114,000 new subscribers in the most recent quarter. That is one part of the business Dolan intends to keep.

Ultimately, if you're considering shares of Cablevision or are a shareholder, you may owe yourself a deeper look at the future possibilities. If Dolan's proposal goes through, more than 37% of Cablevision would be spun off to an overvalued entity that will have trouble retaining its $12.50 price tag. Conversely, at $21 cash per share for the profitable portions of the company, Dolan would be getting a bargain.

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Fool contributor Tarek Sultani is a freelance writer and a darn good cook. He does not own shares in any of the companies mentioned here. For recipe suggestions or to comment on this article, feel free to email him.