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Cablevision Systems Corp.'s (CVC) board approved plans to spin off its Madison Square Garden and related assets, like the New York Knicks and Rangers sports teams, by year's end as the cable-television company looks to focus on its core operations.

The announcement, which came as Cablevision announced in-line second-quarter results, lifted company shares by 8.29% recently to $20.50 as investors applauded the separation of what some considered a trophy asset and drain on CVC's results.

The tax-free spinoff, which remains subject to regulatory and final board approvals, would distribute to Cablevision shareholders a share of MSG for each share they hold of the parent, and the dual-class share structure that keeps control over the media and entertainment conglomerate in the hands of the Dolan family will remain in place.

Hank Ratner, who oversees the MSG operations, will head the spinoff, serving as chief executive while remaining vice chairman of Cablevision. James Dolan, who has been said to have an affinity for the company's sports and music venues, will be executive chairman of the public MSG while remaining chief executive of Cablevision. His father, Charles Dolan, will remain chairman of Cablevision.

Sanford Bernstein analyst Craig Moffett said the move is a "clear positive" for investors, even if it falls short of other more ambitious restructurings.

"It will spin off a hard-to-value and complex asset and shine a spotlight on the remarkable free cash flow generation of the cable business," Moffett said. "What it doesn't do is change what is still a problematic ownership structure at this company."

Investors have complained about the Dolans investing cash flows from the company's industry-leading cable business into MSG's assets - including the newly renovated Beacon Theatre in Manhattan or pricey salaries for athletes - which have done little to drive returns for shareholders.

The spinoff plan comes as Madison Square Garden begins a renovation that executives have already acknowledged will cost more than the planned $500 million. The company, though, has said the project will be funded solely through MSG.

"We believe that the combined value of [Cablevision's] assets hasn't been fully realized, and that this transaction will be beneficial to shareholders as both Cablevision and MSG freely pursue their own individual business plans," James Dolan said in a press release.

The company reiterated it isn't considering the sale of MSG or any of Cablevision's business at this time.

Gregg Siebert, executive vice president of Cablevision, said on a conference call that the company doesn't anticipate adding debt to MSG's balance sheet, but he's confident the business could shoulder more debt if need be.

Moody's Investors Service recently raised Cablevision's credit ratings, saying a spinoff would simplify the company's business model and reduce volatility in operations and capital requirements.

Meanwhile, Cablevision said its second-quarter earnings fell 8.1% on hedging losses, which more than offset rising sales.

It posted income of $87 million, or 29 cents a share, down from $94.7 million, or 32 cents a share, a year earlier. The latest results included a $15.9 million loss on derivatives contracts, while the prior year's included gains on derivatives and swap contracts.

Revenue increased 9.8% to $1.88 billion. Analysts polled by Thomson Reuters expected per-share earnings of 29 cents and revenue of $1.88 billion.

At Cablevision's telecommunications business, by far the company's largest, revenue rose 5% and earnings grew 15%, driven by higher numbers of Internet and voice customers. Basic video subscribers fell 1.2% from a year earlier, while Optimum Online high-speed data customers grew 4.5%.

At the MSG business, revenue edged down 0.9% as its operating loss widened. Cablevision's Rainbow unit - which includes cable channels such as AMC and IFC - posted a 5.3% gain in revenue as income jumped 61%, as cable networks continue to be a rare bright spot in the media industry.

Cablevision finished the quarter with $11.8 billion in debt - a prime concern for investors since the global financial crisis shook Wall Street.

"The bigger concern is making sure we get our maturity schedule in order, so we're confident we can effectively refinance," Siebert said. "We're confident we can refinance today, but it would be prudent for us" to explore refinancing some debt scheduled to mature in 2011, 2012 and 2013 as interest rates become more attractive.

-By Nat Worden, Dow Jones Newswires; (212) 416-2472; nat.worden@dowjones.com

(Kerry Grace Benn contributed to this report)