In an unusual twist to Wall Street’s current M&A craze, Cablevision’scontrolling family has decided to take the cable concern private and spin off its entertainment division.
The reason? The pressure from Wall Street for short-term results is incompatible with the challenges facing the cable provider, the controlling Dolan family said in a statement.
“We strongly believe that a long-term, entrepreneurial management perspective — not constrained by the public markets’ tendency to focus on short-term results — will better enable the cable company to meet its competitive challenges,” Chairman Charles Dolan and his son, CEO James Dolan, said in a statement.
Shareholders will receive $21 a share in cash and shares of the company’s Rainbow Media properties, valued at $12.50 a share. CVC shares rocketed 19% on the news.
It’s not that Wall Street has been unkind to Cablevision. While the stock is down by more than half from its 1999-2000 peak — what service provider isn’t? — it’s also up 500% from its 2002 lows. But with pressure from satellite and telecom service providers, the capital-intensive cable industry needs to be as efficient as it can. And with controversial moves like the Voom satellite service and a bid for bankrupt Adelphia’s assets that went instead to competitors Time Warnerand Comcast, Cablevision can be forgiven for thinking it’s had enough distractions.
The broader market finished with modest losses Monday after oil prices hit a new all-time high.
The Nasdaq slipped 2 to 2088, the S&P lost 1 to 1216, and the Dow declined 13 to 10,610. Volume declined to 1.71 billion shares on the NYSE, and 1.45 billion on the Nasdaq. Decliners led 19-13 on the NYSE, and 17-12 on the Nasdaq. Downside volume was 53% on the NYSE, and 51% on the Nasdaq. New highs-new lows were 200-22 on the NYSE, and 97-36 on the Nasdaq.
eBayfell 2% on possible competition for its PayPal unit from Google, which rose 2% on the reports.
Ameritradelost 3% on reports that it was near a deal to buy TD Waterhouse.
Omnivisionfell 7% on a downgrade.