Cablevision Systems’ new shareholder charm offensive yielded its first tangible sign of progress Friday.
The cable-system and basic-cable-network giant instituted a 10-cent-per-share quarterly dividend on its two classes of stock payable Sept. 18 to shareholders of record Aug. 26.
The company -- in which the Dolan family votes a 75% controlling stake from its ownership of supervoting stock -- has usually been closed-mouth with shareholders, but it recently said it would pursue a more shareholder-friendly stance. In the past, it was said that Wall Street shunned Cablevision stock because of its secrecy, in what was called “the Dolan discount.”
The company’s charm offense revved up as it was just learned that activist hedge fund Harbinger Capital Partners bought a 4.9% stake in Cablevision and other institutional investors pressed for change.
In the past, the Dolan family attempted to take Cablevision private, but shareholders voted down such bids, seeking higher prices.
“This action is a part of the process we have undertaken to enhance shareholder value as we continue to explore other options that we believe will help align the market value of the company’s common stock with Cablevision’s underlying operating performance,” Cablevision CEO and president James Dolan said in a Friday statement.
The cable-TV industry traditionally has not paid cash to shareholders due to its heavy capital-expenditure investments in physical plant. Investors would thus profit only from stock appreciation. However, Comcast initiated a dividend recently after criticism for not delivering gains to shareholders and Time Warner Cable is paying a big one-time dividend.
“Return of capital has become a broader trend for cable as the industry has deleveraged over the past several years and capital intensity has recently begun to moderate,” Morgan Stanley Research said in a note to investors. “This is the first tangible sign that CVC is shifting its capital-allocation strategy following its recent ‘listening tour’ with investors. We expect to see further steps from Cablevision in the coming months.”
Cablevision has 296 million shares outstanding, so the dividend will pay $29.6 million to its shareholders.