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Family's Cablevision Bid Dropped

October 26, 2005|From Associated Press

NEW YORK — The family that controls Cablevision Systems Corp. has abandoned a bid to take the company private in the latest twist in a yearlong saga of turmoil at the New York-area cable TV provider.

After months of feuding between the father and son who run Cablevision, the Dolan family had offered in June to buy out Cablevision's public shareholders in a transaction that would have formed two separate companies, a privately held cable TV system business to be run by Cablevision Chairman Charles Dolan and a publicly traded cable network company to be run by his son, Chief Executive James Dolan.

But after four months of negotiations, the family was unable to reach agreement with a special committee of the company's board over terms for the transaction, the Dolans said in a letter to Cablevision's directors.

In their letter, Charles and James Dolan noted that valuations for communications companies had declined recently, suggesting that they might have wanted to lower their original offer of $21 a share in cash for the cable business, something the board would have probably opposed.

The Dolans' decision to give up the bid could also be a sign of reconciliation between the father and son, who would have gone their separate ways had the transaction to go private succeeded. James Dolan went through heart surgery last week, and is expected to make a full recovery.

The Dolans declined to comment.

The news sent Cablevision's shares down $3.54, or 12.7%, to $24.26.

At the same time, the Dolans also suggested that Cablevision consider paying a one-time dividend of $3 billion, saying that bond investors were currently valuing the company's growing cash flow more highly than stock investors were. The company said it would consider the proposal, but declined to make any other comment beyond a brief statement.

Investors had bid Cablevision's shares as high as $33.90 after the Dolan family announced June 19 that it planned to buy out the company's public shareholders.

But the shares have weakened since September along with those of Comcast Corp., the largest cable television company in the country, amid worries that cable television's emerging businesses of high-speed Internet and digital phone service and even its core video services could be challenged by new offerings from phone companies and other communications providers.

That probably widened the gap between what the Dolans were willing to pay to take the company private and the price the company's board would ask for, said Craig Moffett, an analyst with Sanford C. Bernstein & Co.

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