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Cablevision Systems Corp. agreed May 12 to a $650 million deal for Tribune Co.'s Long Island, N.Y. newspaper Newsday, having defeated a $580 million bid by News Corp.'s Rupert Murdoch and marking the cabler's second deal in a week.
While Cablevision's offer
for Newsday seemed to hang out there, it
was still looking toward other deals. The Bethpage, N.Y.-based company
unveiled plans May 7 for a deal worth nearly $500 million for the Sundance Channel, an agreement that wrapped up a four-month auction.
Sundance's sellers are
General Electric Co.'s NBC Universal Inc., which holds 57%; CBS Corp.'s
Showtime Networks, which has 37%; and Robert Redford, who founded the
channel and holds 6%. From a valuation standpoint, the price, The Deal's Richard Morgan noted, values each of Sundance's 30 million subscribers at $16.53 -- which falls between the $12 NBCU paid per Oxygen subscriber in 2007 and the $18 NBCU paid per Bravo subscriber in 2002. Meanwhile, Cablevision was up against Murdoch, as well as New York Daily News owner Mort Zuckerman in a bid for Newsday. Cablevision was reported to be in the running for the Long Island paper in March, which was followed by a report as not interested in April, and then it officially emerged as a bidder May 5. According to several reports April 22, Tribune Co.'s Sam Zell, which owns Newsday, was said to be near a deal worth $580 million with Murdoch. Newsday reported April 29 that Cablevision could be working on a bid for the paper and potentially teaming with New York Observer's Jared Kushner. Talk of Kushner's involvement would fade. A March 21 New York Times article pointing out Cablevision's interest was followed by a report from Richard Greenfield, a research analyst at Pali Capital Inc., who also felt a deal for Newsday by Cablevision was a possibility. "We increasingly believe a meaningful portion of CVC's free cash flow over the next couple of years appears to be headed for a series of noncore acquisitions," the analyst noted. Cablevision, Reuters reported subsequently, wasn't interested, but after Charles and James Dolan tried and failed repeatedly to stage a management-led buyout of their company, looking for external deals seemed a distinct possibility. MOVING ON AFTER REJECTION The Dolan family failed in October 2007 pursuing a management-led buyout of the company for the second time. The latest bid, a $22 billion offer, was put before a shareholder vote Oct. 24, despite key investors coming out in opposition ahead of the meeting. Legg Mason Inc.'s ClearBridge Advisors joined the dissident cry Oct. 17. The cabler's largest shareholder said it would vote against the $36.26 per share deal, saying it undervalues the company, just days after Mario Gabelli's Gamco Investors Inc. came out against it and RiskMetrics Group's Institutional Shareholder Services Inc. recommended shareholders vote against the buyout. T. Rowe Price Group Inc. was also said to be in opposition to the deal. The opposition didn't come as too much of a surprise. Some analysts have valued the company's stock at as much as $50 per share. The company announced the buyout May 2, nearly four months after its last offer was rejected. The Dolans are in it for the cash, The Wall Street Journal said in May, as substantial investment used to launch new products like high-speed Internet is nearing its end and "the decline in its capital spending has turned Cablevision into a cash-generating machine capable of throwing off hundreds of millions of dollars a year." On Jan. 16, the family was again rebuffed in its bid for the company, days after launching its third take-private offer proposal worth $8.9 billion. In a letter to the father and son team, a committee comprised of independent directors called the offer "inadequate." On Jan. 12, the Dolans boosted their offer from $27 to $30 a share, offering about $8.9 billion for the portion they don't already own. The news came about three months after the Dolans launched their second take-private offer for the company, which sent Cablevision shares soaring and ultimately led to the sweetened bid. Charles and James Dolan, the chairman and chief executive, respectively, of the Bethpage, N.Y.-based cabler, said then that they would pay $27 a share, or about $6.3 billion, for the target's shares they did not own, an offer they said was 14.9% above the consideration they first put forth in June 2005, and one that valued the company's debt and equity at $19.2 billion. READING BETWEEN THE LINES In 2005, the Dolans launched a $33.50 a share bid for the company, including $21 in cash for Cablevision's cable business and a share of Rainbow Media Holdings, a collection of entertainment assets that they planned to spin off into a separate company. The bid implied a valuation of $12.50 per share for Rainbow Media -- which owns Madison Square Garden, the Independent Film Channel and other networks, the New York Knicks basketball team and the New York Rangers hockey team.
The next offer, disclosed in October 2006, was simpler in structure and offered a higher premium to shareholders, as Dow Jones pointed out, but at a 13% premium to the stock's closing share price a day earlier, it left room for improvement. The buyout may have put the company's other assets in play as well. In November, Cablevision fielded and rejected a $700 million offer for the Knicks and the Rangers from an investment group led by financier and former Icahn Associates exec Russell Glass, which it dismissed as lacking credibility. At the time, an analyst told The Deal the pair of teams and their home arena, Madison Square Garden, would more likely fetch at least $1 billion. LEGAL WOES The company weathered some legal trouble when it tried to withdraw the dividend offer, and later with stock-options-backdating issues.
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