Gabelli Solicits Potential Cablevision Board Members9/25/2008 7:07 AM Eastern
Gamco Investors, the Rye, N.Y.-based mutual fund headed by activist investor Mario Gabelli, has increased its position in Cablevision Systems and is soliciting other shareholders to put together a possible slate for the MSO’s board of directors.
In a Securities and Exchange Commission filing Sept 25, Gamco revealed that it spent about $14 million to increase its position in Cablevision to 19.7 million shares, or about 8.4% of the 233.7 million Cablevision shares outstanding.
But perhaps even more interesting is Gamco’s revelation in the filing that it also is “considering contacting individuals concerning their interest and their qualification to serve on the board of directors of certain public companies, including [Cablevision].”
As a result, Gamco wrote that it may submit recommendations for one or more nominees at Cablevision’s annual meeting. And, the filing continued, if that person or persons are selected, Gamco would vote for their election.
In an interview, Gabelli (pictured) said that the statement in the Cablevision filing is one Gamco has made in SEC filings with its other large holdings.
“It’s not singling out Cablevision or Telephone & Data Systems, but the ones we’ve circulated are highly on our minds,” Gabelli said.
Gamco, he said, owns stakes of 5% or greater in about 120 companies, including Media General, Telephone & Data Systems and Cablevision. In the past few days it has included the board member solicitation wording in a dozen SEC filings.
“We’re not going to pay a consulting firm to bring us anyone. The whole world is going to be knocking on our door. Let’s see what happens.” Gabelli said.
Gabelli added that he hasn’t spoken to any serious candidates yet.
“I don’t have any specific person in mind. I have a lot of people but no one specifically for Cablevision,” Gabelli said. “I want to look at who understands the allocation of cash flow, who understands the concepts of corporate governance. It’s not directed to Cablevision, it’s directed to a whole bunch of companies.”
But his decision seems to be at least in part sparked by the entry of a new investor on the Cablevision scene—Harbinger Capital, which began amassing its 9% Cablevision interest earlier this year and is known as an activist shareholder that pressures companies for board seats.
Many analysts believe that Cablevision’s recent shareholder-friendly stance is in part because of Harbinger’s investment in the company.
“He wants to keep the dialog going,” Miller Tabak media analyst David Joyce said of Gabelli, adding that one of the goals of an activist shareholder is to gain board seats.
Whether Gamco will be able to gain a seat on the board of directors remains to be seen. Cablevision expanded its board to 17 members in August, adding two members of the Dolan family—chairman Charles Dolan’s daughter Deborah Dolan-Sweeney and his son-in-law Brad Dorsogna. The Dolan family, which controls about 74% of Cablevision’s vote through its Class B super-voting shares, also dominates board selection.
According to Cablevision’s 2007 proxy statement, the Class B shareholders elect 75% of the board and there is no requirement that any of those directors be independent or be chosen independently. Of the 17 current board members, nine are members of the Dolan family and three—former Viacom CEO Frank Biondi, former ITT chairman Rand Araskog and former Century Communications chairman Leonard Tow—were first named personally by Charles Dolan in 2005.
Biondi and Araskog are elected by the Class B shareholders while Tow is elected by Class A shareholders. All directors are elected for one-year terms at the company’s annual shareholder meeting, which normally takes place at its Bethpage, N.Y. headquarters in May or June. A formal date for the 2008 annual meeting has not been set yet.
Cablevision spokesman Charles Schueler declined to comment.