Cablevision Stock Up on Liberty, Time Warner Speculation
By Mike Farrell -- Multichannel News, 1/18/2007 1:59:00 PM
Just two days after a special transaction committee rejected an offer by its ruling Dolan family to take the company private, Cablevision Systems shares soared more than 5% ($1.52 per share) to $30.77 each Thursday.
That price exceeds the $30 per share the Dolan family offered Jan. 12 to purchase the remaining 80% of Cablevision stock it didn’t already own. A special transaction committee of independent Cablevision directors shot down that proposal late Jan. 16, calling it “inadequate.”
Analysts said Thursday that the surge in Cablevision’s stock price is probably due to three factors: public statements by one of Cablevision’s largest shareholders that he would back a larger bid from the family or an outright sale of the cable assets; the possibility of an eventual sale of Cablevision to Time Warner Cable; and speculation that Cablevision could sell its Rainbow Media Holdings programming unit to Liberty Media.
On Jan. 16, before the special committee rejected the Dolans’ offer, Gamco Investors chairman Mario Gabelli -- who owns 8.5% of Cablevision’s stock -- wrote in a blog that he would favor the Dolans substantially increasing their bid (through a $6 payment-in-kind preferred offering) or an outright sale to Time Warner Cable.
And on Jan. 18, a New York Post article speculated that Liberty chairman John Malone renewed his interest in Rainbow, which includes AMC, The Independent Film Channel, and WE tv.
Liberty -- which recently inked a deal with News Corp. to gain a controlling interest in direct-broadcast satellite giant DirecTV Group -- has been said to be a prime candidate to buy Rainbow for months.
Miller Tabak media analyst David Joyce said that in addition to the Gabelli statement and Liberty, investors also see the rejection of the Dolan family bid as growing proof of the “waning power of controlling shareholders,” which could have also contributed to the rise in the stock price.
