Dolans thwarted yet again

Talk turns to sale of Rainbow nets

The third time was not the charm for the Dolan family that controls Cablevision Systems.

In its third attempt during the past two years to take the cable operator private, the family did not get enough shareholder support Wednesday for its proposed $10.6 billion buyout. It was the first proposal to go private that was put to a Cablevision shareholder vote.

The defeat immediately re-ignited talk about a potential sale of the company's Rainbow Media cable networks to another media and entertainment firm like John Malone's Liberty Media.

"While we are disappointed that shareholders did not approve the transaction, there is really nothing negative about today's outcome," chairman Charles Dolan and CEO and son James Dolan said. "We see today's outcome as a vote of confidence in the prospects of Cablevision, its management team, its 20,000 employees and the industry's future."

Cablevision shares closed down 3.3% on Wednesday at $30.82. They have traded between $27.20 and $39.75 during the past year. Analysts expect the stock to remain under pressure in the near term amid a general malaise of cable stocks, even though several predict Cablevision's stock will end up going higher during the next year.

Industry watchers said the Dolans could now either wait until the end of the debt market crunch to launch yet another privatization attempt and/or sell assets, particularly the Rainbow Media networks.

"Cablevision may look to sell noncore assets (AMC/WE/IFC) to bring down leverage, either to enable a large dividend payout and/or drive yet another Dolan attempt to take the company private," Pali Research analyst Richard Greenfield said.

Amid rising opposition from institutional shareholders, Wednesday's defeat of the proposed transaction was expected (HR 10/18).

Based on preliminary voting results, the family did not receive the votes to approve the acquisition of the company for $36.26 per share in cash, the company said. Analysts had put a value of up to $50 on shares.

Some investors have criticized the Dolans for looking to take the firm private on the cheap only to flip it down the line for a big profit to a big cable company, most likely Time Warner Cable.

While the Dolans control a voting majority in Cablevision, a majority of shareholders not affiliated with the clan had to approve the buyout to make it happen.
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