And they're off! On Friday, little-known New York broker BTIG Research became the first analyst (to my knowledge) to officially endorse the spinoff of Cablevision's (NYSE: CVC) AMC Networks (Nasdaq: AMCXV) division as a buy.
Breaking bad
No wonder. The network that once subsisted on "American Movie Classics" now boasts a slate of original series such as Mad Men (available this summer on Netflix (Nasdaq: NFLX), which should help out both companies), Breaking Bad, the controversial The Killing, and ratings smash The Walking Dead.
But while everyone knows the shows, Yahoo! Finance has essentially no data on the company (tentatively tickered "AMCXV"). The Fool's favorite data source, Capital IQ -- a division of Standard & Poor's -- does have some info for us, though.
According to Capital IQ, AMC will be a big company. Already trading under the ticker named above, AMC is valued at a $3 billion market cap, and just less than $38 a share. (That's about $10 per share short of where BTIG values it.)
Walking dead
At this price, however, I'm not sure AMC's stock will show much of a pulse once it finally breaks free from Cablevision. BTIG suggests the company will quickly get snapped up by a larger rival like CBS (NYSE: CBS), Comcast (Nasdaq: CMCSA), or Time Warner (NYSE: TWX). Personally, I think the company's "edgy" line-up fits better with News Corp's (NYSE: NWSA) Fox.
Alas, valuation could be a problem here. We're not sure how profitable AMC is, but Capital IQ pegs its annual revenue at about $1.1 billion, giving the stock a 2.7 price-to-sales ratio. The potential buyers named above, in contrast, sell for P/S ratios between 1.3 and 1.6.
Mad men
The quality of its lineup notwithstanding, I think the networks would have to be crazy to pay so much for AMC -- especially since Cablevision is loading it up with $2.4 billion in debt ahead of the spinoff.
I don't think you need to watch this spinoff right away. For now, I'd suggest you DVR AMC, and wait for the numbers to firm up and the valuation to come down.
