Cablevision Shareholders Vote Down Buyout Plans
Concerns about coming competition from Verizon’s FiOS service didn’t help a $10.6 billion proposed buyout of Cablevision as much as some had expected. Shareholders rejected the controlling Dolan family’s $36.26 a share offer Wednesday, the company said, based on a preliminary vote tally. Cablevision CEO James Dolan said the result was a “vote of confidence in the prospects for Cablevision.” The result came as little surprise. Several of Cablevision’s largest shareholders had signaled their intent to vote against the Dolans’ offer, which they viewed as too low.
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
Some investors wanted keep a piece of the company even after the Dolans took it private. Clear Channel’s recent sale to a consortium of private equity groups was structured that way, with investors allowed to buy into “stub” equity. “Since the sale of CVC was not and will not be shopped, we want a piece of the back end,” Gamco Investors CEO Mario Gabelli wrote on his blog last week. “Just read the Clear Channel deal.”
Wednesday’s vote marks the third failure in two years of attempts by the Dolans to take Cablevision private. The family holds most of the company’s stock, but the deal required approval from the holders of a majority of the other shares. The company may buy back shares and finance the purchases with asset sales, Wachovia analyst Jeff Wlodarczak wrote. The Rainbow Media programming unit is a likely candidate for a sale, he said.
Investors are spooked by the looming threat of FiOS, which is available in about 25 percent of Cablevision’s territory, Wlodarczak said, and analysts expect the company to report weak third-quarter results. Despite everything, Cablevision probably will turn into a cash cow for investors soon, he said. “Cablevision has become a free cash flow growth story rather than an unit/RGU [subscriber] growth story, and in the end even if Verizon significantly expands its FiOS offer within Cablevision’s footprint there are still only going to be two major players in the residential phone, residential data, residential video, and enterprise video/voice/data for the foreseeable future within CVC’s attractive footprint,” he said. “[That’s] an attractive long term market structure in our opinion.” Cablevision shares fell 3.25 percent Wednesday.