Dolan Family Makes $7.9 Billion Offer to Take Cablevision Private

The family that controls Cablevision Systems Corp. (CVC) offered to take the company private Monday in a deal that values the cable television operator at $7.9 billion. It was the second time in less than two years that the mercurial Dolan family has tried to buy out public shareholders.

The Dolans said in a statement they would offer $27 in cash for each Cablevision share. The family owns 22.5 percent of the company's stock but has 74 percent voting power through a special class of shares. In pre-market trading, Cablevision shares surged 21 percent to $29.

The Dolans had made another offer in June of last year to take the cable TV part of the company private in a deal that also would have resulted in the spinoff of a separate public company containing several cable networks, Madison Square Garden, Radio City Music Hall, the New York Knicks basketball team and the New York Rangers hockey team.

The family couldn't reach an agreement with its board over the earlier offer and eventually dropped it. Under the new offer, the family would take the entire company private and also assume $11.3 billion in debt.

The offer of $27 per share in cash is about 15 percent higher than the previous offer, accounting for a one-time dividend of $10 per share that was paid out in the interim. The company's shares closed at $23.93 on the New York Stock Exchange on Friday.

A spokesman for the Bethpage, N.Y.-based company declined to comment.

In a letter to Cablevision's board, the Dolan family said it was not interested in any other kind of transaction and would not sell its stake in the company. Cablevision is seen as having well-run and desirable cable businesses, and Time Warner Inc. has long been known to be interested in buying them at the right price.

If the deal goes through, the current management would stay in place, including Cablevision's founder and chairman, Charles F. Dolan, and his son, James L. Dolan, who is CEO.

The offer marked the latest dramatic turn for the Long Island, N.Y.-based company, which has locked horns with New York Mayor Michael Bloomberg over now-defunct plans for developing a stadium in Manhattan. The company was also riven by a feud between Charles and James Doland over the fate of a high-definition satellite TV venture, though those differences now appear to be patched up.

Cablevision suffered a blow this summer when it became the latest company to come under federal investigation for its stock options practices. It also came to light that Cablevision had granted options to an executive after he died and changed the date on them to make it appear he received them while he was alive.

Several other companies have also gone private recently amid a continued willingness on Wall Street to underwrite such transactions with debt. In August, Aramark Corp. (RMK), the nation's largest food-service company, agreed to be acquired by a group led by its longtime CEO for $6.3 billion plus the assumption of about $2 billion in debt.

Cable television stocks have fared well in recent months as the companies, particularly Cablevision, have succeeded in expanding into telephone service and high-speed Internet access. Phone companies, meanwhile, have had a tough time getting into cable TV's core offering of video services, while satellite broadcasters have been unable to offer high-speed Internet.

The Dolan family will finance the deal by investing all of its Cablevision shares, valued at about $1.7 billion based on the offer price, and through debt financing, according to the statement. The family said it has received a commitment letter for financing from Merrill Lynch & Co. (MER) and Bear, Stearns & Co. Inc.

"We are convinced that private ownership is highly desirable, and we are willing to assume the risks of full ownership and additional leverage to ensure that the Company has the structure and flexibility it needs to continue to grow," the Dolans said in a letter to the board.