Cablevision Systems on the Block?9/16/2002 11:27 AM Eastern
Cablevision Systems Corp. stock rose more than 8 percent Monday after
chairman Charles Dolan was quoted in The New York Times as being open to selling his cable systems to AOL Time Warner Inc.
Dolan was characteristically vague when answering a Times reporter's
questions regarding selling systems to help fund a perceived $1 billion funding
shortfall in 2003.
'We're not in love with our assets,' Dolan told the Times. 'And at a
point when you have brought a service to maturity, it could very well be the
time to monetize it so you can do something else. And I don't think we resist
Dolan went on to say that he has a good relationship with AOL Time Warner CEO
Richard Parsons, as he did with former CEO Gerry Levin.
'The reason Time Warner constantly comes up is: Hey, we're doing exactly the
same thing in the same market,' Dolan said. 'It is artificially divided. We
ought to be doing more together. And I hope we will ... And I hope [Cablevision
CEO] Jim [Dolan] works something out because I think those two should be
combined in some way.'
Cablevision declined further comment.
Speculation about a possible sale to Time Warner has
been around for years.
While Cablevision's 3 million subscribers in the New York metropolitan area
would fit well with Time Warner Cable's Manhattan system, analysts have said the
main obstacle to a deal in the past has been price -- Dolan's has been
historically way too high.
In May 2001, at AOL Time Warner's annual meeting, then-CEO Gerry Levin said
putting together the two companies would be 'interesting,' but added that no
deal was imminent.
The news gave a temporary lift to Cablevision's stock, which climbed as high
as $11.89 in early trading Monday, up 91 cents, but leveled off to $11.13 each
in afternoon trading.
The stock rallied later in the day to close at $11.70, up 72 cents each.
The stock finished up on the day despite Standard & Poor's Corp.'s
decision to downgrade Cablevision's corporate credit rating to 'BB' from
'BB-plus' and remove the company from 'CreditWatch.'
S&P didn't mention the possible systems sales, but added that it was
concerned that Cablevision has lost about 17,000 subscribers so far this
'The downgrade reflects the higher degree of uncertainty
about the company's ability to grow operating cash flow from its cable services,
which include analog-cable, digital-cable, cable-modem and telephony services,'
S&P said in a prepared statement.