Dolans to Sell Cablevision?

The Dolan family has tried on three occasions to take Cabelvision Systems Corp. (NYSE:CVC) private but failed. So would the Dolan family ever let go of their much beloved Cablevision? According to a feature in Barron's, it is a very real possibility.

The article suggests that the country's fifth-largest cable company could be an attractive takeover target now that it has decided to spin off its Madison Square Garden unit, which includes the New York arena, MSG Television Network, and the National Hockey League's New York Rangers and National Basketball Association's Knicks. Barron's says that a spinoff of MSG would make Cablevision's balance sheet much more attractive to both Wall Street investors and potential acquirers, Comcast Corp. (NASDAQ:CMCSA) and Time Warner Cable Inc. (NYSE:TWC).

Additionally, Comcast could return to an acquisitive mode now that a court ruling has freed it from a government cap on how many cable networks it can control. Meanwhile, TWC is now free to explore acquisitions too since it no longer has to answer back to former parent Time Warner. However, don't expect the Dolans to part with their company soon as Barron's says such a sale is a few years out.

- Matthew Wurtzel

Comments

[Julio:]

Matthew,

There isn't a lot of value added with this post since you mainly just regurgitate the Barron's article.

A few points:
1. The CVC board and shareholders would have to approve a Dolan buyout. With the company generating more free cash flow now that capex is declining and soon to be free of MSG, it's would command a decent premium. The Dolans are unlikely to get financing in this environment for the price they'd need to pay.

2. The government cap had nothing to do with cable networks. It was a FCC ban on the amount of pay TV subscribers that a company could control (30%). Also, no one took the cap seriously since it had been struck down before.

3. Time Warner Inc. was never really an impediment to Time Warner Cable's potential to do deals. The big factor is their desire to keep their debt ratio at 3.25 cash flow so that they can retain an investment grade rating. They're above that at the moment as a result of the special dividend related to their separation from TWX, but are do to get back to 3.25 by early next year. However, since it operates in NYC, buying Cablevision would indeed be a good fit.

Sep 15 11:20 AM