Dolans up bid for Cablevision

Investors drop stock 2% after new offer

Cablevision chairman Charles Dolan and his CEO son Jim again upped their bid for the company Friday, but the Street shrugged.

Dolans, who are seeking to take the company private, offered investors $30 per share, or $8.9 billion, a premium of 11% over their October offer of $27.

Despite the new offer, however, the stock closed down 4.1% at $28.39.

Wall Street feels the price-per-share could go deeper into the thirties, mainly because the cable sector has enjoyed such success over the last few months. Rival companies such as Comcast and Time Warner have, like Cablevision, seen double-digit stock growth, and cablers have grown phone and Internet services so that they are well positioned to fend off competition from telcos.

One analyst, the outspoken Rich Greenfield, described the $30 bid as an affront and urged the board to reject it.

“Do not let Chuck and Jim Dolan steal CVC,” he wrote in an investor note, recommending that the board settle for no less than $35 per share.

The rationale of the critics is that the company is flourishing; its content biz has reportedly attracted attention from the likes of several buyers, which could be interested in buying some networks.

Adding fuel to the skeptics’ fire: Cablevision has been coveted by companies like Time Warner, which Greenfield and others believe would offer well above $30 per share if Cablevision was placed on the block.

A special committee is investigating whether to accept the offer of the Dolans, who currently own 23% of the company’s stock but 75% of the voting stock.

One analyst, Tom Eagan of Oppenheimer, did feel that the new offer would be persuasive to investors. Bid is “likely to enable board approval,” he said; comparisons with Comcast showed that the offer valued Cablevision’s subs higher than Comcast’s.

Cablevision is a relatively small cable operator, with about 3 million subscribers in the New York metro area. But the affluence of its customers — and other assets like Madison Square Garden, AMC, IFC and IFC Films — give it appeal beyond its footprint.

The desire to take it private was prompted by the perception that the market isn’t valuing media and entertainment companies, though, ironically, cable operators have lately proved the exception to that rule.

Some have expressed concern that the Dolans could sell the company soon after taking it private, essentially depriving investors of profits. The Dolans are said to be addressing those concerns with investors as well as the special committee.

Resolution of the ongoing drama could come soon. The Dolans have thrown down the gauntlet and said this “best and final offer” will expire by Wednesday.

Greenfield has gone the other way, saying that the amount of the offer and expected committee reaction to it would mean that the firm will likely “remain a public company.”

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