Copyright 2005 N.Y.P. Holdings, Inc.All Rights Reserved The New York PostJuly 27, 2005 WednesdayBy Eric Moskowitz From Lexis Nexis
The knives have come out against Cablevision Systems Corp. and its plan to take its cable systems unit private.
The Bethpage, L.I.-based cable giant was sued by a shareholder seeking to block the plan of company Chairman Charles Dolan and his son, CEO James Dolan, from taking the company's lucrative cable systems unit private for $7.9 billion.
Penn Capital Management said in a lawsuit that the buyout offer was "triggered by a family feud" and that "Cablevision should have the corporate opportunity to sell those assets to the highest bidder."
The "feud" refers to a boardroom showdown between the two Dolans over the fate of the money-losing satellite venture known as Voom earlier this year.
Cablevision's board has yet to vote on the Dolans' proposed offer.
"This lawsuit is a shot across the bow to Cablevision's board that shareholders believe there is incremental value that the Dolans' offer has left on the table," said Craig Moffett, an analyst at Bernstein.
Penn Capital, based in Cherry Hill, N.J., owned 0.04 percent, or 86,000 Cablevision shares, at the end of June, according to Bloomberg. Cablevision and Penn Capital didn't return calls seeking comment.
Under the proposal, the Dolan family would take the company's lucrative cable business, which serves about 3 million area homes, private, while the remaining assets -- including Madison Square Garden, Radio City Music Hall and a handful of cable channels -- would be spun into a new publicly traded company called Rainbow Media.
Cablevision isn't the first cable operator to take the private route. Cox Communications went private late last year and Insight Communications said earlier this year it intends to go private. The reasoning behind the move, say analysts, is that cable companies need to spend more money to combat telephone companies who can now offer phone, TV and Internet service to customers.
Other media companies have been looking to split up as a way to boost the value of their holdings. For example, media giant Viacom's board last week approved a deal to split into two publicly traded companies.
A shareholder suit seeking to block the Dolans' $7.9 billion buyout says Cablevision directors could have done a lot better.