Cablevision Accepts Dolan Buyout Offer
By Anne Becker -- Broadcasting & Cable, 5/2/2007 11:28:00 AM
Cablevision Systems Corp. accepted a buyout bid of about $10.6 billion from the Dolan family, which founded and controls the company. The offer, $36.26 a share, was the Dolans' third offer to take the company private and shows their continued bullishness on the cable industry. The offer is a 34% increase from the $27-a-share bid the Dolans made and the board rejected in October 2006 and a 21% increase from the $30-a-share bid they made in January. It requires approval by a majority of Class A shares the Dolans don't have, Cablevision said in a statement announcing the deal. Including debt, today's deal is valued at about $22 billion. By putting up money for a deal attractive enough to please the Bethpage, NY-based board, Cablevision founder/Chairman Charles Dolan and his son, Chief Executive James Dolan are acknowledging the cable industry's strength in the face of competition from phone companies and the Internet. Cablevision, which owns cable systems in more than 3 million homes throughout New York in addition to MadisonSquareGarden, the New York Knicks and Rangers and several cable entertainment networks, stands to generate a cash windfall over the next several years as it curbs capital spending. Over the past ten years, Cablevision has invested in new digital services, like high-speed Internet, and because of that is slightly ahead of its larger competitors like Comcast and Time Warner in offering customers a so-called "triple-play" of services - digital TV, phone and Internet. While Cablevision faces competition for customers in its area from Verizon, about 80% of its subscribers have signed up for digital cable and 30% have signed up for phone service and its sales rose 13% during fourth-quarter off growth from new products. In going private, the Dolans also liberate themselves from the constant watchful eye of public investors and shareholders. Known as maverick deal-makers, the Dolans have been criticized over the years by analysts and investors alike for risky business moves.
