Cablevision Declares Dividend; Dolans Eye Privacy?


Setting the stage for the Dolan family to possibly attempt once again to take Cablevision Systems Corp. private, the cable company said late Friday that its board declared a special cash dividend of $10 per share on each outstanding share, payable April 24.

Cablevision said it will pay the dividend from its CSC Holdings subsidiary.

The Dolans had first proposed paying the special dividend in October, after they planned to take the company private. But Cablevision put the dividend on hold in late December to avoid violating certain bank covenants.

In January, the company completed its review and determined that it was in com­pliance with all of its loan covenants.

Cablevision said it would fund the dividend through about $3 billion in term loans issued to CSC Holdings March 29.

Citigroup Global Markets Inc. cable analyst Jason Bazinet said recently that he expected Cablevision founder Charles Dolan and CEO James Dolan to use pro­ceeds reaped from the dividend to take Cablevision private and eventually sell the company to Time Warner Cable.

Bazinet said the dividend would re­duce Cablevision’s equity float and allow the Dolans to spend about $2.8 billion to fund the dividend, or about $570 million less than if they tried to take the company private without the special dividend.

Bazinet wrote that the Dolans could pay a 25% premium to Cablevision’s existing share price and still keep leverage below the nine-times threshold, having to borrow about $4.4 billion instead of $7.3 billion.

“To believe that the special dividend isn’t linked to a decision to go private, you sort of have to believe that the Dolans have changed their minds,” Bazinet said on a conference call late last month. “Anytime you’re constructing conspiracy theories, the conspiracy theory almost by defini­tion has to be simpler than the reality. I think ours is pretty simple: The Dolans still want to go private, but they are just going about this in a different way.”