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Dolans raise Cablevision bid to $8.9B

Tue, 01/16/2007 - 6:29am

By SETH SUTEL AP Business Writer
01/12/2007

BETHPAGE, N.Y. (AP) _ The controlling shareholders of Cablevision Systems Corp., the Dolan family, raised their bid on Friday to take the company private for $8.9 billion and said it was their final offer.

The offer of $30 per share is an increase of 11 percent over their previous proposal of $27 per share for the New York-area cable operator, which also owns Madison Square Garden, several cable networks and other properties.

The Dolans had been widely expected to raise their bid, but some analysts said it wasn't clear if the new offer would be accepted by a special committee of independent directors on Cablevision's board.

The Dolan family, led by Charles Dolan, the chairman, and his son James, the CEO, own about 20 percent of Cablevision's stock but control 70 percent of the shareholder vote through a special class of shares. The Dolans said the latest offer will expire at the close of business Wednesday.

''Do Not Let Chuck and Jim Dolan Steal CVC,'' Pali Capital analyst Richard Greenfield said in a note to investors Friday, referring to Cablevision's ticker symbol.

Greenfield said it was unlikely that the company's board would accept the offer, given a runup in the stocks of other cable companies since last October, when the Dolans announced their offer, and also since Cablevision deserved a premium to its competitors given its stronger earnings growth and desirable location of its 3 million subscribers, who are largely located in the New York area.

Sanford C. Bernstein analyst Craig Moffett said in a note that the Dolans' offer was no better than current market valuations of cable companies, and said it was unclear whether the bid would be ''deemed sufficient.''

Other analysts, however, said the new offer stood a good chance of getting approved. Thomas Eagan of Oppenheimer and Kathy Styponias of Prudential both said the new bid was likely to pass muster.

Shares in Cablevision have been trading above $27 since late October in anticipation of a higher bid, and the shares slumped Friday on disappointment that the Dolans' bid wasn't higher. Cablevision's shares fell $1.21, or 4.09 percent, to close at $28.39 on the New York Stock Exchange.

The Dolans tried to take Cablevision private before, but couldn't reach an agreement with the board's special committee of independent directors. The earlier offer was more complicated and involved spinning off a separate, publicly traded company, while the newer offer was more simple, with a straight offer to take the entire company private.

However, after a long period of uncertainty, cable stocks came back into favor with investors last year, especially as the companies -- particularly Cablevision -- capitalized on a compelling ''triple play'' offering of video, Internet and phone service that turned out to be a hit with customers and staved off competition from satellite TV providers like DirecTV Group Inc. and EchoStar Communications Corp.'s DISH network. Cable operators also have yet to face serious inroads into their video business from phone companies.

The Dolans have said they aren't interested in selling the company to another party, and with their control over the shareholder vote, a hostile bidder wouldn't be able to seize control. However they said in a letter to the board's special committee that their going-private proposal would be conditional on a majority vote of the company's public stockholders.

Cablevision issued a statement saying the special committee of its board of directors would review the new proposal but offered no further comment.

AP Business Writer Jeremy Herron contributed to this story.

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