Cable TV Firm Ends Plan for Special Dividend
Executives of Cablevision Systems Corp. said Monday that they canceled plans for a $3-billion special dividend payment to shareholders after finding that the cable TV company was in violation of certain terms of its bank credit agreement.
The news sent Cablevision’s shares down 85 cents, or 3.5%, to $23.15. The stock has plunged 29% since early July.
The company -- the largest cable provider in the New York area and the owner of the Knick and Ranger sports franchises there -- also said it had halted a $1-billion debt offering that analysts said would have paid for part of the dividend.
Cablevision’s controlling family, the Dolans, proposed the dividend in October after withdrawing a plan to take the company private and spin off its cable networks and other entertainment assets. The buyout plan would have been worth $7.9 billion, or $33.50 a share.
If the dividend had gone through, the Dolans -- who own 22% of Cablevision’s shares -- could have received more than $650 million, analysts said.
The violation of the credit agreement was a technical one, Cablevision Chief Executive James Dolan told analysts.
Still, “We take these matters extremely seriously and we really want to have them fully resolved before we go forward with any strategic activity on the company’s part,” Dolan said.
The canceled dividend and bond sale cap a year of reversals at Cablevision. The company flip-flopped on closing its Voom satellite service at the beginning of the year after Chairman Charles Dolan staged a boardroom coup to keep it alive.
In spring, a last-minute bid for industry rival Adelphia Communications Corp. was rejected.
James Dolan also took aim at New York Mayor Michael R. Bloomberg for supporting the construction of a football stadium that would have sat several blocks from Madison Square Garden, a Cablevision property.
“This just adds more fuel to the fire for investors who are wary about the unpredictability of governance at Cablevision,” said Craig Moffett, an analyst at Sanford C. Bernstein & Co.
Cablevision denied last month that it might sell the Knick basketball and Ranger hockey teams. The Wall Street Journal reported that the company had received an offer for the teams worth $700 million from financier Russell Glass.
“The thing about the Dolans is ... sometimes it seems like there’s always something in the hopper,” said Matthew Harrigan, an analyst at Janco Partners Inc. “You’re never wanting for distraction here.”