St. Petersburg Times
Special report
Video report
  • For their own good
    Fifty years ago, they were screwed-up kids sent to the Florida School for Boys to be straightened out. But now they are screwed-up men, scarred by the whippings they endured. Read the story and see a video and portrait gallery.
  • More video reports
Multimedia report
Print Email this storyEmail story Comment Email editor
Fill out this form to email this article to a friend
Your name Your email
Friend's name Friend's email
Your message
 

Family's goal: Take Cablevision private

Cablevision CEO James Dolan will lead the spinoff, Rainbow Media Holdings, and remain a Cablevision director.

Associated Press
Published June 21, 2005


NEW YORK - After months of intense public scrutiny, the family that controls Cablevision Systems Corp. is offering to take the cable TV provider private, marking the latest dramatic turn for a company that has been riven by a family feud and mounted a fierce showdown with the mayor of New York.

At the same time, Cablevision will spin off its lucrative cable channels - AMC, IFC and WE - into a new company called Rainbow Media Holdings that will also include several regional sports networks, Madison Square Garden and the sports teams that play there, the New York Knicks and the New York Rangers.

Cablevision's CEO James Dolan, who had sided with board members in opposing a satellite venture championed by his father Charles, the chairman, will head up the Rainbow unit to be spun off while remaining a director of Cablevision. Charles will continue as chairman of Cablevision.

The Dolan family, which controls the company through a special class of supervoting shares, announced the proposed transaction on Monday.

Under the terms of the deal, Cablevision shareholders would receive $21 per share in cash and stock in Rainbow estimated to be worth $12.50 per share.

The combined value of $33.50 per share, or a total of $7.9-billion, represents a 25 percent premium over the closing value of Cablevision's shares on Friday. Cablevision's shares jumped $5.31 or 20 percent to $32.18 Monday on the New York Stock Exchange.

The Dolans said they were only interested in the going-private transaction and did not plan to sell their stake to another party. They said a committee of independent directors on the company's board would review the proposal on behalf of the company's public shareholders.

However, Sanford C. Bernstein analyst Craig Moffett wrote in a note to investors that it was possible another bidder for Cablevision's coveted cable assets could emerge, such as a private equity investor or Time Warner Inc., which is often mentioned as a potential acquirer of Cablevision. A Time Warner spokeswoman declined to comment.

Cablevision's 3-million cable customers clustered around the New York area, and an industry-leading rollout of premium services such as digital phone and high-speed Internet, make Cablevision an attractive takeover target.

In a letter sent to the company's board on Sunday, Charles and James Dolan said they "strongly believe that a long-term, entrepreneurial management perspective - not constrained by the public markets' tendency to focus on short-term results - will better enable" the cable company to meet its competitive challenges.

If the deal goes through, Cablevision would become the second major cable TV company to go private in recent months. In October, Cox Enterprises Inc., a private media conglomerate in Atlanta, bought out the public shareholders in its cable TV unit, Cox Communications Inc.

The Dolans, while widely regarded as some of the best operators of cable properties in the industry, have caused some confusion among investors in recent months with several apparent changes in strategic direction.

This spring, the company was divided over whether to pursue an expensive venture into satellite broadcasting. The elder Dolan championed the venture, called Voom, while his son James sided with board members who wanted to shut it down. The business eventually closed down but still operates several high-definition cable channels.

Cablevision also sued to block the development of a stadium and convention center in midtown Manhattan that would have competed with Madison Square Garden.

In the process, the company mounted a bitter campaign against New York Mayor Michael Bloomberg. That move came after Cablevision's bid to develop the land was rejected.

Also, Cablevision made a last-minute bid for the assets of Adelphia, a bankrupt cable provider that eventually ended up being sold to Time Warner and Comcast Corp., the top cable provider. Several investors in the cable industry did not see Cablevision's bid as credible.

If the going-private transaction is completed, the Dolan family would own all of the cable business and 20 percent of Rainbow. The family owns about 20 percent of Cablevision but controls about 71 percent of the vote through its special class of shares.

[Last modified June 21, 2005, 02:30:30]


Share your thoughts on this story

[an error occurred while processing this directive]
Subscribe to the Times
Click here for daily delivery
of the St. Petersburg Times.

Email Newsletters

ADVERTISEMENT