Cable Operators

Dolan Holdings for Sale? Maybe Not

9/01/2006 8:00 PM Eastern

Citigroup media analyst Jason Bazinet reiterated his “buy” rating and raised his 12-month price target on Cablevision Systems Corp. from $24 per share to $28 each, dusting off decades-old speculation that the Bethpage, N.Y., based cable operator and programmer could sell off some or all of its assets.

Although Cablevision stock is up 42% this year, Bazinet wrote that an asset sale — involving either its cable systems, its Madison Square Garden arena or its cable networks — could serve as an added catalyst for the shares.

Speculation that Cablevision's ruling Dolan family would sell out has been around for more than 10 years, and Bazinet couched his comments by stating that it is “possible — perhaps even likely — that all three asset sales do not happen.” Nevertheless, Bazinet came up with eight different scenarios, including an outright sale of the entire company, which he said could attract a price of about $33 per share. Without a sale, he values the stock at $24.85 per share. Cablevision shares were priced at $23.09 each on Aug. 30.

Bazinet based his new target on the chance that the assets get sold — he placed a 25% probability on a sale of the cable systems, 75% for Madison Square Garden, and 25% on the cable networks. Bazinet valued the cable systems at eight times cash flow, with the networks garnering a 13 times multiple.

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