Julio

Dolans to Sell Cablevision?

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.

Cablevision Soars; Will the Dolans Try Again?

While I agree that the Dolans at some point may make another play for privatizing CVC, I don't make the connection between Jim Dolan's comments and that course of action. In my opinion, I believe he's just addressing shareholder dissatisfaction with the gap between value and market price, which may be caused more by the company's non-cable holdings. My guess is that he's going to make more of an effort to convince the market of the value of the non-cable businesses.