Dolans Pull Cablevision Offer


In a surprise move, the Dolan family has withdrawn its $7.9 billion proposal to take Cablevision Systems Corp. private, citing an inability to reach an agreement with a special transaction committee set up by the Bethpage, N.Y.-based MSO’s board of directors to review the deal.

In a letter to Cablevision’s board Tuesday, the Dolans wrote, “Despite good-faith negotiations over the past four months, it has become clear that we will be unable to reach agreement with the special transaction committee on the terms of our proposal. During this period, we have witnessed a decline in communications-sector valuations and an increased competitive environment.”

The Dolans also recommended to the board that it issue a $3 billion dividend to shareholders.

The Dolan family -- led by Cablevision chairman Charles Dolan and CEO James Dolan -- proposed in June to purchase the remaining shares of Cablevision stock they didn’t already own in a cash-and-stock deal valued at $7.9 billion.

According to that proposal, the Dolans would pay Cablevision shareholders $21 per share in cash and $12.50 per share in Rainbow Media Holdings LLC stock. As a result of the transaction, Cablevision would be taken private and Rainbow -- including its national cable networks, AMC, WE: Women’s Entertainment and Fuse -- would be spun off as a publicly traded company.

Cablevision appointed the special transaction committee in July, consisting of current independent board membersStateUniversity of New YorkMaritimeCollege president Vice Admiral John R. Ryan USN (Ret.) and former JPMorgan Chase & Co. managing director Thomas Reifenheiser.

Analysts have expected that the Dolans would have to increase the offer and that the MSO was placing too high a value on Rainbow. Some analysts have valued Rainbow at about $11 per share.

Cablevision stock -- which had enjoyed a strong run-up since June (it had reached $33.90 per share in the early days after the deal was announced, a 36% increase over its closing price of $26.87 June 17) -- fell nearly 12% ($3.25 per share) to $24.55 each in early trading Tuesday.