Sale of Cablevision could be end of an era
Charles and James Dolan spent 37 years building Cablevision Systems Corp. into a telecommunications and media powerhouse. Over the last five, they have systematically dismantled it. If and when the $17.7 billion sale to Altice SA, announced Thursday, goes through, they will officially be out of the business of providing cable TV and Internet to customers.
Charles and James Dolan spent 37 years building Cablevision Systems Corp. into a telecommunications and media powerhouse. Over the last five, they have systematically dismantled it. If and when the $17.7 billion sale to Altice SA, announced Thursday, goes through, they will officially be out of the business of providing cable TV and Internet to customers.
The deal will be lucrative for the Dolans, who control about 72 percent of Cablevision's votes, and for their investors, who will get $34.90 a share, almost double the company's share price less than six months ago.
It also suggests the Dolans think that the best days of cable are behind them.
The Dolans' timing has raised some eyebrows, given their extensive experience in the industry. "That the Dolan family has finally decided that now is the time to sell, after thirty years of feeling just the opposite, is perhaps a bit unsettling," Craig Moffett, of MoffettNathanson L.L.C. research firm, wrote in a note to clients.
The pressure on cable companies has been growing. Cable providers have been losing TV subscribers en masse since 2010 as customers have cut service to watch video on cheaper alternatives such as Netflix and have switched to rival providers, including FiOS, DirecTV. and Dish Network. And the Obama administration has been threatening to regulate broadband, which could hurt profits if price increases are eventually capped.
Cablevision, specifically, has been facing increased competition from Verizon's FiOS service. The territory of the two providers overlaps significantly in the New York area, forcing Cablevision to compete on price.
Cablevision began its disintegration in 2010 by spinning off Madison Square Garden Co., owner of the New York Knicks basketball team and the New York Rangers hockey team. Shares of MSG, which the Dolan family still controls, have since gained more than 250 percent. Another spin-off, AMC Networks Inc., which began trading in June 2011, has more than doubled. The Dolan family remained in control of each, and today, its personal fortune is valued at $4.3 billion, according to Bloomberg Billionaires.
In 2013, Cablevision sold Bresnan Broadband Holdings L.L.C., a collection of Northwest U.S. cable assets, to Charter Communications Inc. for $1.6 billion.
The Dolans may also be looking to sell the cable networks they still own through MSG. That company plans to split into two on Sept. 30: One entity will own the sports teams and real estate, including Madison Square Garden and Radio City Music Hall, and the other will own its regional sports networks. The split paves the way for MSG to sell its cable networks to 21st Century Fox Inc. or Comcast Corp., Brandon Ross, an analyst for BTIG in New York, said in April.
James Dolan is in line to receive at least $128 million if he's dismissed as CEO after Altice, headed by Patrick Drahi, acquires the company, according to company filings. If nothing else, Dolan, 60, could have more time to devote to his band, JD & the Straight Shot, and to rebuilding the Knicks, who have posted a losing record for 11 of the last 14 years.