Cablevision Systems Corp. (CVC) swung to a first-quarter profit, helped by strong cable results, but news that the company may spin off its Madison Square Garden operations sent shares to their highest levels in six months.

The MSG unit includes famous New York entertainment venues Madison Square Garden, Radio City Music Hall and the Beacon Theater, as well as the New York Rangers and New York Knicks sports franchises. Depending on the spinoff's structure, the division could be worth up to $1.5 billion.

A potential MSG spin-off is welcome news to investors, Miller Tabak analyst David Joyce said, many of whom have argued that MSG should be separated from Cablevision's higher growth businesses and perhaps held privately by the Dolan family, which controls Cablevision through a dual-class share structure.

"[Cablevision Chief Executive James Dolan] likes to pay big bucks for sport stars," Joyce said. He estimated MSG could be worth between $750 million and $1.5 billion as a stand-alone business. In the first quarter, MSG's revenue rose 2.3% to $271.3 million and its operating loss improved 89% to $2.2 million reflecting a prior-year write-down.

Cablevision's MSG comments suggest a shift in tone by the Bethpage, N.Y., cable and entertainment company, which had pulled back last fall from considering strategic options like asset sales and spin-offs, citing uncertainty in financial markets following the global banking crisis and economic downturn.

On the company's conference call, Cablevision Vice Chairman Hank Ratner said the renovation of the MSG arena will likely cost more than planned. In February, Dolan said there was "no change" in the company's plans to spend $500 million on the iconic arena.

Ratner's comments may have sent Cablevision's stock in reverse. The stock, which rose as much as 18% Thursday to $21.58, rapidly fell to an intraday low of $16.48. The stock has since recovered and recently traded at $19.07, up 4%.

Meanwhile, Cablevision's first-quarter results - when combined with similar results from cable operators Comcast Corp. (CMCSA) and Time Warner Cable Inc. (TWC) - should bolster investor confidence that the sector can withstand the weak economy and pullback in consumer spending.

For the three months ended March 31, Cablevision reported a profit of $20.2 million, or 7 cents a share, reversing a year-earlier loss of $31.6 million, or 11 cents a share. The loss on derivative contracts narrowed to $33.7 million from $106.3 million.

Revenue rose 11% to $1.902 billion, basically in-line with the average analyst estimate of $1.898 billion on Thomson Reuters. Analysts were expecting earnings of 15 cents a share.

Adjusted operating cash flow increased 14.3% to $590 million, and consolidated operating income grew 21.3% to $297.8 million.

"Overall, this was a strong quarter from Cablevision," Joyce said.

At Cablevision's telecommunications business, by far the company's largest, revenue rose 5.3% and earnings jumped 14%, driven by broadband-subscriber growth and higher rates.

In February, Chief Operating Officer Thomas Rutledge said cable-subscriber growth in the quarter to that point was ahead of last year's results.

Cablevision said late last month that it will launch a 101-megabits-per-second high-speed Internet service - more than twice as fast as rival Verizon's much-touted FiOS. The announcement suggested Internet service providers might be moving away from bundled packages to focus on bandwidth and speed, rapidly becoming more important to subscribers using the Internet.

The company's Rainbow unit - which includes cable channels such as AMC and IFC - posted an 11% revenue rise while operating income rose 40%. Cable networks have been a rare bright spin in the media industry as they are less advertising-dependent.

-By Nat Worden, Dow Jones Newswires; 201-938-5216; nat.worden@dowjones.com

(Mike Barris contributed to this story)