New York – After months of intense public scrutiny, the family that controls Cablevision Systems Corp. is offering to take the cable-television provider private, marking the latest dramatic turn for a company that has been riven by a family feud and mounted a fierce showdown with the mayor of New York.
At the same time, Cablevision will spin off its lucrative cable channels – AMC, IFC and WE – into a new company called Rainbow Media Holdings that will also include several regional sports networks, Madison Square Garden and the sports teams that play there, the New York Knicks and the New York Rangers.
Cablevision’s chief executive, James Dolan, who had sided with board members in opposing a satellite venture championed by his father, Charles, the chairman, will head up the Rainbow unit to be spun off while remaining a director of Cablevision. Charles Dolan will continue as chairman of Cablevision.
The Dolan family, which controls the company through a special class of supervoting shares, announced the proposed transaction Monday.
Under the terms of the deal, Cablevision shareholders would receive $21 per share in cash as well as stock in Rainbow estimated to be worth $12.50 per share.
The combined value of $33.50 per share, or a total of $7.9 billion, represents a 25 percent premium over the closing value of Cablevision’s shares on Friday. Cablevision’s shares jumped $5.31, or 20 percent, to $32.18 Monday on the New York Stock Exchange.
The Dolans said in a statement that they were only interested in the going-private transaction and did not plan to sell their stake to another party. They said a committee of independent directors on the company’s board would review the proposal on behalf of the company’s public shareholders.
However, Sanford C. Bernstein analyst Craig Moffett wrote in a note to investors that it was possible another bidder for Cablevision’s coveted cable assets could emerge, such as a private-equity investor or Time Warner Inc., which is often mentioned as a potential acquirer of Cablevision. A Time Warner spokeswoman declined to comment.
If the deal goes through, Cablevision would become the second major cable-television company to go private in recent months.
In October, Cox Enterprises Inc., a privately held media conglomerate based in Atlanta, bought out the public shareholders in its cable-television unit, Cox Communications Inc.
