Dolan family loses bid to take Cablevision private

The Dolan family, which built Cablevision Systems Corp. into one of the most successful cable TV providers in the country, is going to have to keep dealing with public stockholders for the foreseeable future.

Shareholders on Wednesday rejected a $10.6-billion bid from the Dolans to take Cablevision private, clearly seeing the company as more valuable than the price the Dolans had agreed to pay. Cablevision has 3 million cable customers in the New York area and owns Madison Square Garden and the New York Knicks.

James Dolan, Cablevision’s chief executive, announced the results of the vote at a special shareholder meeting at the company’s headquarters on New York’s Long Island.

Dolan said the family was disappointed in the outcome but still viewed it as a vote of confidence in the company and its leadership.

On that point, the Dolan family and investors agree. Large Cablevision shareholders, Wall Street analysts and shareholder advisory firms opposed the Dolans’ effort to take the company private.

Ironically, Cablevision’s own success undermined the Dolans’ buyout plans. The company has been a leader in signing up customers for premium services such as high-speed Internet and digital phone.

Craig Moffett, an analyst with Sanford C. Bernstein, called the outcome an “unequivocal vote” that the Dolans’ price of $36.26 a share wasn’t enough. Moffett called the vote “a courageous decision to make for any money manager,” knowing that it was sure to result in a short-term decline in the stock price but was also “a tremendous vote of confidence in the company.”

Cablevision’s shares traded down after news of the vote came out, declining $1.04, or 3.3%, to $30.82 in heavy trading after the immediate guarantee of a $36.26-a-share payout evaporated.