Shares of Cablevision (CVC) Rise on M&A Potential
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Shares of Cablevision Systems Corp. (NYSE: CVC) are currently trading up 3.02 percent on the day to $14.65, but have been up as much at 5.8 percent amid a Bloomberg report suggesting it could be solid acquisition target for the likes of Time Warner Cable (NYSE: TWC) or Comcast (Nasdaq: CMCSA).
Bloomberg believes a bid by Time Warner would make the most senses as a merger between the two would allow for a large reduction in employee expenses and programming fees.
Albert Fried & Co. forecasts the company's board would require an offer of at least $23 per share to be acquired, which currently represents 56 percent upside from current levels. At $23 per share, CVC would only be acquired at seven times its earnings before interest, taxes, depreciation and amortization. Bloomberg notes, this would mark the lowest takeover multiple in the industry for a publicly traded company.
Shares of CVC have recently experienced a downturn after its Chief Operating Officer, Thomas M. Rutledge, announced he would be leaving the company for undisclosed reasons. It was later confirmed, after about one week, that he would be taking over the role as Chief Executive Officer at Charter Communications, Inc. (Nasdaq: CHTR). Shares are down 44 percent since June 30th when management informed shareholders of its plans to spinoff AMC.
Analysts highlight a low multiple for Cablevision maybe called for as growth potential is becoming limited for the company. The company has been facing tougher competition in the New York metropolitan area after Verizon (NYSE: VZ) expanded access of its FiOS TV network to cover 40 percent of CVC's whole area and began offering strong promotional incentives for residents to switch. Also, not counting the Bresnan Communications acquisition, Cablevision's video customers have fallen 2 percent since 2005.
Other analysts note that while Cablevision becomes cheaper, the company’s Chairman, Charles Dolan may be pondering acquiring the company and taking it private. Mr. Dolan has tried to take the company private in the past. In 2005 he made an offer of $33.50 per share, which was reject along with his 2006 and 2007 offer of $36.26 per share. Theses previous offers represent a 15 times Ebitda multiple at that time. The Dolan family currently owns roughly a 21 percent stake in Cablevision.
Bloomberg believes a bid by Time Warner would make the most senses as a merger between the two would allow for a large reduction in employee expenses and programming fees.
Albert Fried & Co. forecasts the company's board would require an offer of at least $23 per share to be acquired, which currently represents 56 percent upside from current levels. At $23 per share, CVC would only be acquired at seven times its earnings before interest, taxes, depreciation and amortization. Bloomberg notes, this would mark the lowest takeover multiple in the industry for a publicly traded company.
Shares of CVC have recently experienced a downturn after its Chief Operating Officer, Thomas M. Rutledge, announced he would be leaving the company for undisclosed reasons. It was later confirmed, after about one week, that he would be taking over the role as Chief Executive Officer at Charter Communications, Inc. (Nasdaq: CHTR). Shares are down 44 percent since June 30th when management informed shareholders of its plans to spinoff AMC.
Analysts highlight a low multiple for Cablevision maybe called for as growth potential is becoming limited for the company. The company has been facing tougher competition in the New York metropolitan area after Verizon (NYSE: VZ) expanded access of its FiOS TV network to cover 40 percent of CVC's whole area and began offering strong promotional incentives for residents to switch. Also, not counting the Bresnan Communications acquisition, Cablevision's video customers have fallen 2 percent since 2005.
Other analysts note that while Cablevision becomes cheaper, the company’s Chairman, Charles Dolan may be pondering acquiring the company and taking it private. Mr. Dolan has tried to take the company private in the past. In 2005 he made an offer of $33.50 per share, which was reject along with his 2006 and 2007 offer of $36.26 per share. Theses previous offers represent a 15 times Ebitda multiple at that time. The Dolan family currently owns roughly a 21 percent stake in Cablevision.
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