TCI, Cablevision Close Systems-For-Stock Deal

Author:
Publish date:
Updated on

Tele-Communications Inc. and Cablevision Systems Corp.
closed their big systems-for-equity deal last week, as TCI transferred its metropolitan
New York systems to Cablevision and got back 12.2 million Cablevision shares.

With the pickup of 830,000 customers in New Jersey and in
areas around Westchester County and Long Island, N.Y., Cablevision figures that it has
amassed the country's single largest regional cluster, with 2.5 million cable homes.
And TCI, through its TCI Communications Inc. subsidiary, now owns about one-third equity
in Cablevision.

Cablevision remains under the control of chairman Charles
Dolan and members of his family, who own supervoting shares in the MSO.

Cablevision officials, including regional senior vice
president of cable operations Joseph Azznara and senior vice president of planning and
performance Margaret Alberto, said banners with the Cablevision brand are already on
display at ex-TCI system offices and operators are answering the phone with the new name.
And ads announcing the switch will start appearing in local newspapers soon.

Ex-TCI system managers remain in place, and all TCI
employees were offered jobs with Cablevision, they said.

Some other decisions -- such as whether and when to
introduce Optimum services and what to do with the nascent TCI Digital Cable service --
won't be made for a while, as budgets are under development, officials said. It
appears likely that rate increases planned by TCI will go ahead.

Cablevision CEO James L. Dolan called the deal a "key
to our strategy to focus resources on our core geographic clusters in the New York, Boston
and Cleveland markets."

The deal, originally announced June 9, was one of several
catalysts that ignited the big cable-stock rally in the second half of last year.
Cablevision especially benefited from the deal, which imputed a high valuation to
Cablevision: Its stock price has soared from $34.63 June 6 to about $95 last week.

Recognizing that run-up and wanting to make its stock more
accessible, Cablevision last week set the dates for its previously announced two-for-one
stock split, to be done as a special stock distribution of one common share for each
common share outstanding. The record date will be March 19, and the payment date will be
March 30.

Several other key deals between the two companies followed,
including one by Fox Sports -- jointly owned by News Corp. and TCI's Liberty Media
Group -- to buy 40 percent of Cablevision's regional sports channels (part of Rainbow
Media Holdings Inc.). TCI and Cablevision have a pending deal to swap 250,000 TCI
customers in Connecticut for Cablevision's Kalamazoo, Mich., system and more
Cablevision stock. And Cablevision became an affiliate of the TCI-controlled @Home Network
high-speed-data consortium.

Related