March 19 (Bloomberg) -- The Sundance Channel, the cable network built around Robert Redford's annual film festival, is for sale and Cablevision Systems Corp. may be the eventual buyer, according to Pali Research.

Owners General Electric Co., CBS Corp. and Redford are seeking $400 million to $500 million for the channel, which has 26 million subscribers, Richard Greenfield, an analyst at Pali Research in New York, wrote today in a report, citing sources he didn't name.

Cablevision already has an interest in independent films, Greenfield wrote. The Bethpage, New York-based cable operator owns the Independent Film Channel, IFC Films and AMC Network. New York-based Sundance, following the example of AMC, plans to begin accepting advertising after being commercial-free, he said.

``While buying Sundance could be a positive long-term strategic move for Cablevision's IFC, we believe it would be perceived negatively,'' wrote Greenfield, who advises investors to sell the company's shares. ``The free cash flow we expect Cablevision to generate would flow into non-core investments.''

Sundance Channel spokeswoman Sarah Eaton and Cablevision spokeswoman Kim Kerns declined to comment.

Viacom Inc. and Time Warner Inc. may also be interested, since they have specialty film divisions, Greenfield wrote.

Time Warner spokesman Ed Adler declined to comment, as did Viacom spokesman Jeremy Zweig.

Owners

General Electric's NBC Universal owns 55 percent of the Sundance Channel, Greenfield wrote. CBS has 35 percent and Redford owns 10 percent, he said.

``While we believe both NBC and CBS would have interest in owning 100 percent of the network, we believe issues surrounding pricing to an existing owner make it more likely that the network is sold to a third party,'' Greenfield wrote.

CBS spokesman Dana McClintock declined to comment and NBC Universal spokeswoman Cory Shields didn't respond to a message seeking comment.

Cablevision, which has lost 13 percent this year, fell 59 cents to $21.20 at 4:01 p.m. in New York Stock Exchange composite trading.

Time Warner, the world's largest media company, rose 7 cents to $14.41. CBS fell 24 cents to $22.30 and Viacom Class B lost 11 cents to $39.30. GE slid 55 cent to $35.59.

To contact the reporter on this story: Andy Fixmer in Los Angeles at afixmer@bloomberg.net

Last Updated: March 19, 2008 16:11 EDT