Old-Media Companies Want Their Privacy

Dolan Family Plan to Privatize Cablevision Follows Radio, Publishing Moves

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NEW YORK (AdAge.com) -- Message from media companies to Wall Street: We're more valuable than you give us credit for.
Cablevision wouldn't be the first publically held cable operator to take itself private. Cox and Insight executed similar moves in 2004.
Cablevision wouldn't be the first publically held cable operator to take itself private. Cox and Insight executed similar moves in 2004.

The Dolan family, which heads Cablevision, is the latest to make that point, today delivering a plan to Cablevision's board of directors to buy 100% of Cablevision's stock at $27 per share. The stock closed Friday at $23.93. The offer values the company at $7.9 billion.

Buyout price 'quite low'
The stock surged 11% on the news, up to a midday price of more than $26 a share. Several analysts have weighed in on the plan, believing the Dolan family would have to up its per-share price. A note from Deutsche Bank said the price seemed "quite low" and Bank of America told its investors it wouldn't be surprised if the stock traded through the offer price today.

But if the Dolans can get the board to agree to a buyout, Cablevision will follow in the footsteps of the fifth-largest cable operator, Cox, and the ninth largest, Insight, each of which went private in 2004.

Companies in the radio and publishing industries have been under similar pressures to go private, given they still deliver lots of cash flow but don't exhibit the growth trends that Wall Street finds appealing.

In radio, for example, Emmis CEO Jeff Smulyan has considered privatization talks; after initial talks in August fell through, he said in mid-September he would revisit the issue. And a year ago Cumulus formed a private partnership with Bain Capital, Blackstone Group and Thomas H. Lee Partners to acquire Susquehanna Radio.

Best survival scenario for print
And many in the newspaper industry believe the only way to survive intact is privatization -- a few of the Knight-Ridder newspapers wound up in private hands after its publicly traded owner, McClatchy, said it would not keep them in its public company. And some believe that if Tribune Co. sheds titles under pressure from its largest shareholders, the Chandler family, those dailies could also end up in the hands of private investors. Speculation about whether Time Warner could spin off Time Inc. has resulted in some industry players voicing the opinion that the magazine publisher would be better off as a private company, away from the quarterly demands of investors.

Even Viacom, which has long been considered a fast-growing pure-play content company, has been urged by some to consider privatization in the wake of a slumping stock price. Viacom Chairman Sumner Redstone, however, has said he is not interested in doing so. (He also, however, has a history of changing his mind, telling the Wall Street Journal in July that "he could imagine 'no circumstance' under which he would dismiss [Tom] Freston." A little more than two months later Mr. Freston was ousted as head of Viacom.)

Regardless, a swath of privatized media companies could mean good things for advertisers, as media buyers have privately voiced worries that media companies care too much about their stock prices and too little about making a better product for advertising clients.
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