Cablevision Stock Stoked by Deal Talk
Cablevision Systems to “actively explore alternatives.”
By Robert Marich -- Broadcasting & Cable, 8/5/2008 1:46:00 PM MT
Cablevision Systems talked up its share price in recent days by saying that it will evaluate ways to boost shareholder value, which could mean anything from paying a fat one-time cash dividend, to regular cash dividends, to selling some businesses, to selling the whole company.
The New York-area cable-system giant issued a statement Tuesday announcing that its board approved a plan to “actively explore alternatives.” In a conference telephone call with stock analysts July 31, the publicly traded company said the same thing.
Company stock rose from a closing price of $21.24 per share July 30 -- the day before the analysts’ conference -- to $28.20 Tuesday.
The Dolan family, which controls Cablevision, tried to buy out public shareholders on several occasions but was rebuffed in these efforts to go private. The company did not entertain competing offers to the Dolan bids. The Dolans' most recent offer was valued at $36.26 per share.
Sources speculated that businesses that might be sold are its Rainbow Media Holdings basic-cable networks grouping or its Madison Square Garden sports-team and arena operation. Rainbow owns AMC, The Independent Film Channel and WE tv.
Cablevision’s healthy second-quarter earnings lifted Wall Street expectations, which may make a buyout more difficult by widening the gap between what the Dolans are willing to pay and what stockholders will hold out for.
Cablevision management’s recent stance is more shareholder friendly than in the past. However, Cablevision’s decision to buy 97% of suburban newspaper Newsday for $650 million has been criticized for diversifying into the troubled newspaper sector and was seen as a drag on company share price.
But its recent $500 million purchase of Sundance Channel was praised.
