Mon Feb 28, 2005 12:41 PM ET
NEW YORK, Feb 28 (Reuters) - Shares of Cablevision Systems Corp. (CVC.N: Quote, Profile, Research) rose 4 percent on Monday on speculation that the company's chairman and controlling shareholder may engineer a sale of the company's cable assets to finance his purchase of its money-losing satellite service.
Cable pioneer Charles Dolan, Cablevision's founder, faces a deadline on Monday to complete an agreement to buy Cablevision's Voom satellite television service, putting an end to the financial burden on Cablevision.
Under an agreement announced earlier this month, Dolan and his son Tom, via a new private company called Voom HD LLC, would assume almost all of Cablevision's liabilities of the satellite business. Cablevision had said that Voom HD was in the process of securing financing to support the company's ongoing operations.
But Dolan has yet to detail how they plan to finance ongoing economic liabilities of running the service, comprised of 21 high definition channels, a lease on a satellite and about 26,000 subscribers.
The sale to the Dolans "will set in motion the sale of Cablevision (cable assets) in one form or another," said Richard Greenfield, an analyst at Fulcrum Global Partners, who has been one of the satellite services staunchest critics.
As the company's controlling shareholder, Dolan could engineer a sale of the cable assets by a move to sell his shares in Cablevision, analysts said.
Cablevision was not immediately reachable for comment.
If it were to sell the cable assets, the Beth Page, Long Island-based company would be left with several sports teams -- the New York Knicks basketball and the New York Rangers hockey teams -- cable channels and the Madison Square Garden sports arena.
Voom lost about $300 million in 2004, not including about $100 million in capital expenditure, analysts said.
Time Warner Inc. (TWX.N: Quote, Profile, Research) , which owns cable systems in Manhattan, is the most likely bidder for Cablevision's systems, which are mostly located in New York metropolitan region.
"They would fit very well together," said Christopher Marangi, an analyst at Gabelli & Co., whose asset management division is one of Cablevision's largest shareholder with a 10 percent stake as of Dec. 31.
But Time Warner is also in the middle of a joint bid with Comcast Corp. (CMCSA.O: Quote, Profile, Research) for Adelphia Communications Corp. (ADELQ.PK: Quote, Profile, Research) . If Charles Dolan and Cablevision agree to a sale of its systems, it could throw a wrench in the Adelphia bidding process.
"Time Warner would be far more interested in pursuing Cablevision if it's available today," Greenfield said.
Time Warner and Comcast declined to comment.
Cablevision shares rose $1.03 to $31.21 in afternoon trading on the New York Stock Exchange, after earlier hitting a 22-month high of $31.64.
NEW YORK, Feb 28 (Reuters) - Shares of Cablevision Systems Corp. (CVC.N: Quote, Profile, Research) rose 4 percent on Monday on speculation that the company's chairman and controlling shareholder may engineer a sale of the company's cable assets to finance his purchase of its money-losing satellite service.
Cable pioneer Charles Dolan, Cablevision's founder, faces a deadline on Monday to complete an agreement to buy Cablevision's Voom satellite television service, putting an end to the financial burden on Cablevision.
Under an agreement announced earlier this month, Dolan and his son Tom, via a new private company called Voom HD LLC, would assume almost all of Cablevision's liabilities of the satellite business. Cablevision had said that Voom HD was in the process of securing financing to support the company's ongoing operations.
But Dolan has yet to detail how they plan to finance ongoing economic liabilities of running the service, comprised of 21 high definition channels, a lease on a satellite and about 26,000 subscribers.
The sale to the Dolans "will set in motion the sale of Cablevision (cable assets) in one form or another," said Richard Greenfield, an analyst at Fulcrum Global Partners, who has been one of the satellite services staunchest critics.
As the company's controlling shareholder, Dolan could engineer a sale of the cable assets by a move to sell his shares in Cablevision, analysts said.
Cablevision was not immediately reachable for comment.
If it were to sell the cable assets, the Beth Page, Long Island-based company would be left with several sports teams -- the New York Knicks basketball and the New York Rangers hockey teams -- cable channels and the Madison Square Garden sports arena.
Voom lost about $300 million in 2004, not including about $100 million in capital expenditure, analysts said.
Time Warner Inc. (TWX.N: Quote, Profile, Research) , which owns cable systems in Manhattan, is the most likely bidder for Cablevision's systems, which are mostly located in New York metropolitan region.
"They would fit very well together," said Christopher Marangi, an analyst at Gabelli & Co., whose asset management division is one of Cablevision's largest shareholder with a 10 percent stake as of Dec. 31.
But Time Warner is also in the middle of a joint bid with Comcast Corp. (CMCSA.O: Quote, Profile, Research) for Adelphia Communications Corp. (ADELQ.PK: Quote, Profile, Research) . If Charles Dolan and Cablevision agree to a sale of its systems, it could throw a wrench in the Adelphia bidding process.
"Time Warner would be far more interested in pursuing Cablevision if it's available today," Greenfield said.
Time Warner and Comcast declined to comment.
Cablevision shares rose $1.03 to $31.21 in afternoon trading on the New York Stock Exchange, after earlier hitting a 22-month high of $31.64.
