Cablevision committee nixes Dolan offer

Wed, 01/17/2007 - 7:21am

By SETH SUTEL AP Business Writer

NEW YORK (AP) - An independent committee of directors at Cablevision Systems Corp., a New York-area cable TV provider, on Tuesday rejected an offer from Cablevision's controlling shareholders to take the company private.

In a letter to James Dolan, Cablevision's chief executive, and his father Charles, the chairman, the two-person committee said the Dolans' latest revised offer of $30 a share, or $8.9 billion, was ''inadequate,'' didn't recognize the fair value of the company and wasn't in the interest of Cablevision's public shareholders.

Since the Dolans said Friday that their most recent proposal was their final offer, Cablevision appeared likely to remain a public company, albeit with a separate class of supervoting stock that allows the Dolans to control the shareholder vote.

It was the second time the Dolan family tried to take the company private and failed to reach agreement with the committee. An earlier proposal was more complicated and involved spinning off a separate publicly traded entity, and there again the Dolans and the board couldn't agree on valuations.

Cablevision released the text of the letter late Tuesday and said it would have no further comment on the matter.

The Dolans originally offered in October to buy out Cablevision's public shareholders for $27 a share, but the stock has been trading above that price since then in anticipation that the Dolans would have to pay a higher premium.

The Dolans finally did raise their bid Friday to $30 per share and said they wouldn't raise it any more. Shares of Cablevision were up 10 cents Tuesday to close at $28.49 on the New York Stock Exchange.

The Dolans have also said they would not agree to sell the company to a third party, quashing any hopes that a hostile bidder could emerge.

Several analysts were skeptical that the board would accept the Dolan's revised proposal. ''Do Not Let Chuck and Jim Dolan Steal CVC,'' Pali Capital analyst Richard Greenfield said in a note to investors on Friday, referring to Cablevision's ticker symbol.

The Dolans' offer for Cablevision may have been done in by the company's own success. After a prolonged slump, the stocks of Cablevision and other cable companies have done well in the past year in large part to the success of offering ''triple play'' packages of video, high-speed Internet and phone services.

Cablevision itself was a leader in offering triple play bundles, which not only brought in higher-margin businesses but also staved off defections to satellite providers like DirecTV Group Inc. and EchoStar Communications Corp.'s DISH network, which can't offer interactive services the way cable can.

The two-person committee of independent directors - Thomas V. Reifenheiser and John R. Ryan - said in their letter to the Dolans that Cablevision was the ''best-in-class'' operator in the cable business and had customers in very attractive markets around the New York city area - an assessment that is shared by many financial analysts and investors.

They said the company was well-equipped to meet competitive challenges and to benefit from its position in the marketplace. The Dolans had argued that being privately held would allow them to have a more entrepreneurial management style without having to meet Wall Street's short-term demands.

The independent committee received financial advice from Lehman Brothers and Morgan Stanley and legal advice from Willkie Farr & Gallagher LLP.


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