In an unusual twist to Wall Street’s current M&A craze, Cablevision’s
controlling 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 Warner
, 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.
fell 2% on possible competition for its PayPal unit from Google
, which rose 2% on the reports.
lost 3% on reports that it was near a deal to buy TD Waterhouse
fell 7% on a downgrade.