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Cablevision: An Attractive Takeover Target for Time Warner Cable, Says Barron’s

Phillip Dampier November 7, 2011 Cablevision, Competition, Consumer News No Comments

Cablevision Systems may be engaged in a long term effort to position itself for a sale, some New York investment firms have come to believe.  The most likely buyer?  Time Warner Cable.

The bulk of Cablevision’s assets are located in several boroughs of New York, Long Island, New Jersey and Connecticut.  Virtually all of their service areas, outside of the acquisition of Bresnan Cable in the mountain west, are adjacent to Time Warner, making an acquisition by the nation’s second largest cable operator a natural fit.

This isn’t the first time rumors of a Cablevision sale have been floated.  The Dolan family has run the cable operator for decades, with family patriarch Charles Dolan still controlling a sizable interest in the company.  Barron’s notes the senior Dolan is currently in his 80s.  Son James, current president and CEO of Cablevision, seems more interested in his leadership role at Madison Square Garden, spun-off from Cablevision last year.

“I think the Dolans have positioned the company for a sale,” Mark Boyar, who heads Boyar Asset Management, told Barron’s.

Boyar points to Cablevision’s ongoing efforts to minimize their involvement in side businesses, such as MSG and cable networks like AMC, spun away from Cablevision on June 30.

Buyers like transactions to be simple and straightforward, and Cablevision’s operations increasingly meet both standards.

On its own, Cablevision’s growth opportunities come mostly from rate increases, which subscribers routinely complain about.  The company already enjoys the highest penetration rate among major cable operators and the highest average monthly revenue per subscriber — $150 a month vs. $113 for Time Warner Cable.  With a depressed economy and fierce competition from Verizon FiOS, growing the business (and the stock price) has become increasingly difficult in a maturing industry unlikely to attract new subscribers.

Among the only prospects for subscriber growth on the horizon comes from satellite TV subscribers.  But that alone may not be enough to keep investors satisfied, much less excited.  A sale could bring shareholders a massive return on their investment, particularly if a bidding war breaks out between likely buyers Time Warner Cable and Comcast.  Shareholders ultimately own the company, and should the Dolan family lose their love affair with cable, Cablevision and their subscribers will likely find themselves on the auction block.

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  • Dave: Please post your references for your assertion that ATT made a $70,000 donation. All google searches just link back to you for this....
  • Phillip Dampier: That is a relief. I have WH-DVR service here, mostly so I can watch MSNBC Morning Joe and get annoyed by the always mercurial Joe Scarborough, which i...
  • hillary clinton: if you need a set top box on each tv for $7 my price will go up for that also unless I use a roku stick. $7 x $4 is $28 TWC I only use 1 hd box a...
  • James R Curry: It's also worth noting that in Maxx areas, 50/5 is the same price as 15/1 in non-Maxx areas. So without the Charter buy out, you would have eventuall...
  • Ricardo S: The DVR is treated as an umbrella charge. For example: customer wants 4 DVR's so cost would be 4.99 a piece and one 19.99 DVR service fee. Modem cost ...
  • John: My rates went up so I dropped my cable with the intention of signing up for a streaming service. However, dropping cable caused my 50mbs service to g...
  • Phillip Dampier: You missed my point. Many customers prefer a lower price over faster speed. You started with 50/5Mbps. Most TWC customers choose to pay for 15/1Mbps b...
  • Jk: The article is misleading. You compare the price of 15/1 internet to the price of Charter 60? I have 50/5 from a TW non max area, but I'm paying close...
  • Charles Dennett: Regarding the modem, from what I've heard, Charter includes the price of the modem rental in the price of the Internet access. They don't break it ou...
  • Derpson: Interesting, I have only seen 4megabits/sec advertised as the upload speed. They should be forced to show the upload speed in their advertisements, t...
  • Andy: Thought maybe AT&T and Verizon would consolidate all the land lines in the U.S. at one point. With Verizon shedding systems year after year, I gue...

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