Say good-bye to Cablevision. If you thought the company was tight-lipped now, just wait and see what happens if the Dolan family succeeds in taking it private. We may never again know if Chuck and Jim get into a slugfest like what we saw over failed DBS entity Voom. Kidding aside, the MSO famous for its no-comments has delivered a gift to the cable industry in its $10.6bln deal—and right before all eyes turn to the industry for its annual trade show next week. Cable operator stocks jumped on the news, with Bernstein‘s Craig Moffett declaring the family’s continued efforts to buy the company (this was it’s 3rd attempt after all) evidence of the Dolans’ confidence in the free cash flow potential and in cable’s resiliency in terms of rising telco competition. The deal requires the owners of a majority of Cablevision’s outstanding Class A shares not held by the Dolan family, or Cablevision’s directors and executive officers, to approve the transaction. The deal is seen as more likely to close that previous attempts, thanks in part to the $36.26/share the family will pay. But one indicator that the deal could gain approval may be that lawyers representing shareholders in litigation over going private participated in the deal and helped improve the financials (the legal action is being dropped pending court approval). Still, some are wondering if the pot doesn’t need to be sweetened. "It’s certainly possible the investor base will try and hold out for more, but given the pending competition and increased competition from Verizon coming around the corner and the reduced guidance we saw on basic sub and an RGU basis and on EBITDA growth basis this year vs last year… I think it would be better for investors to take their money now while they have a chance," said UBSJoseph Stein. Moffett says it’s still unclear whether independent shareholders will accept the $36 bid. "We still believe that a higher bid price is warranted given the underlying value of the cable business," he said in a note to clients. "However, given the unmistakably weak sentiment surrounding cable, and low comparable valuations industry-wide, we believe that a $36 offer has a reasonable chance of acceptance." John Linehan, who helps manage $10bln including CVC shares at T. Rowe Price, told Bloomberg the bid is not reflective of the value of the company, saying the firm believes it’s worth in the mid-$40s. Wed’s news, of course, revived questions over whether Time Warner will eventually try to purchase Cablevision. "Our position for many years has been that if the Dolans were ever to decide to part with that business, we would be on their list of people to talk to," TW CEO Dick Parsons said in an earnings call. — Cablevision reports its 1Q results Thurs in a conference call that we’re sure will include a fair share of "no comments."

The Daily


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