Dolans' Bid Loses Steam


Charles and James Dolan's fourth bid in two years to take control of Cablevision Systems Corp. is losing steam as they square off against investors.

Cablevision chairman Charles Dolan and his son and CEO, James, are trying to take Cablevision out of the public eye through a buyout of all outstanding stock at an offer price of $36.26 per share. To do so they need approval from a majority of public shareholders, many of whom—including GAMCO Investors and ClearBridge Advisors—are sounding off against the deal on the grounds it undervalues the company's assets.

Shareholders will vote on the proposed takeover by the Dolans on Wednesday at a special shareholder meeting.

Much of what investors are eyeing is the company's ability to generate free cash flow going forward. Management has projected capital expenditures to decline over the next three years and free cash flow to increase from $1.1 billion in 2007 to $2.6 billion in 2011.

The big blow to the Dolan bid came last week when Cablevision's largest shareholder, ClearBridge, said it was voting against the deal. ClearBridge is an investment manager owned by Legg Mason, which controls approximately 13.8% of outstanding shares.

Other dissenting opinions have come from T. Rowe Price, which owns 5.7% of outstanding class A shares; Marathon Asset Management, which owns 5.3%; and Mario Gabelli, chairman and CEO of GAMCO Investors, which owns 8.3%.

Gabelli, echoing other dissenters, says heavyweights Time Warner Cable and Comcast Corp. would pay more for the cable assets if the Dolans sought a sale. “The fundamental flaw in this whole process is that the deal was never shopped,” Gabelli says.

The Dolans are standing by their offer. James Dolan said if the deal was not consummated, he would be “completely prepared to continue to lead the company into the future as a public company.”


Bill Cella

The Magna Global Worldwide leadercan be tough at the bargaining table—in a charming kind of way