The Dolan family, which controls Cablevision (CVC), Madison Square Garden and the New York Knicks, are starting to look like financial geniuses. Or at the very least, they put one over on Mario Gabelli and the rest of Cablevision’s minority shareholders.
As WSJ’s Deal Journal and Barron’s point out their Oct. 24 offer to buy out the company at $36.26 a share is starting to look incredibly rich, given that Cablevision shares are now trading around $25, and will probably go lower. By not taking the deal, Cablevision’s minority shareholders just saved the Dolans about $10 a share, or $3 billion.
Why did the Dolans want to take Cablevision private? The same reason cable shares are getting hammered today: Their core business may be in for a bit of slump, as penny-pinching families cut back on their cable bill, and they knew big investments were going to be needed (yet again) to fend off new video competition from the telcos — particularly Verizon is building out its own network in Cablevision’s back yard.
Now, assuming they can get the financing, the Dolans will be able to buy back their company for much less, since investors are fleeing cable stocks of all stripes. Industry leader Comcast cut its outlook yesterday. And now Citigroup analyst Jason Bazinet has a “sell” rating on CVC, cutting his target from $33 to $23.
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