Thursday, September 17, 2015

Dolans Finally Agree To Sell

The Dolan Family sure knows how to unlock value. The question in media for a decade or more has always been when will Cablevision sell its systems.  Does patriarch Chuck Dolan need to retire or pass on for Jimmy to let go of the family run business?  But before that would happen, the Dolans would unlock the value of its holdings by spinning off both the AMC Networks and MSG businesses into two separate companies, each still controlled by the family.  And that value boost continues as the MSG company splits into two itself with media and event spaces being separately run.  The result, the empire value has grown and grown.

Today, that profitability continues as the Dolans have agreed to sell its Cablevision business, comprised mainly of  its control of Long Island cable systems as well as Newsday and News 12 cable networks to Altice, a European telco.  And they sell it at a very high premium to its latest stock price.  While Cablevision may have less than 3 million subscribers, its region of Long Island is considered a premium system with the highest household incomes.  It also faces direct competition from Verizon FIOS across the footprint.  Still Attice seems committed to enter the cable media industry.

Altice previously announced its plans to buy the Suddenlink cable properties which when added with Cablevision gives them less than 5 million subscribers.  Neither acquisition will likely bring any cost savings through synergy, unlike the Charter - Time Warner Cable merger.  Altice will likely look for more cable systems to acquire.  Could Cox Cable be next on their screen?

As to the Dolans, the sale of Cablevision might just be a great move to unlock value before the cost of cord cutting takes too heavy a toll. And with their ownership of content companies like AMC and MSG, a freedom to find more revenue generating opportunities outside of cable or fearing moves negative to the cable operations side of their balance sheet.  Rumors are already flying of AMC's plans to purchase the Starz Network.  Perhaps the cash from Altice makes that purchase easier to swallow. 

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