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November 06, 2005
Cablevision To Pay Big Dividend
We can likely do without this story, but it is just too interesting to wonder what is going on in the dysfunctional company called Cablevision. If it were not for the fact that the Dolan's have over 3 Million subscribers in the most highly desirable market of NYC, this company would be close to worthless.
By John M. Higgins -- Broadcasting & Cable, 11/2/2005 5:51:00 PM
Cablevision’s board authorized the company to move ahead with a massive $3 billion one-time dividend that would pay investors $10.25 per share in cash.
The move is remarkable, given that the company’s stock trades for around $25 per share. Talk of the dividend should help support Cablevision’s share price following the collapse of a plan by Chairman Chuck Dolan to take the company private. However, borrowing money and actually paying it out should ultimately reduce the price to around $15.
The dividend would pay the Dolan family that controls the company $600 million. Some investors are clamoring for the company to instead use its financial capacity to shrink the company’s equity base by repurchasing stock. But the primary beneficiaries would be arbitrageurs who bought Cablevision stock around $31 after the Dolans announced their deal and are now in tremendous financial pain since the deal collapsed.
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