Policy

‘Activist’ Could Have Spurred Dolan’s Listening Tour

8/14/2008 7:33 AM Eastern

Cablevision Systems CEO James Dolan’s recently completed listening tour with top investors could have been spurred by fears that a new shareholder, known for its activist slant, would make waves, according to an analyst report Thursday.

Pali Research media analyst Richard Greenfield, who broke the news last week that Dolan was meeting with top investors to gauge their thoughts on improving Cablevision’s value, said in a note Thursday that the emergence of Harbinger Capital as a major shareholder could have forced the CEO into action.

Harbinger has been aggressive in the media sector—it has purchased large blocks of stock in Media General and the New York Times in recent months and has pushed for change at both companies. After threatening proxy battles with Media General, Harbinger recently won three seats on Media General’s board of directors.

It has also been critical of the Times and has demanded that it sell assets and invest heavily in online businesses.

Harbinger filed documents with the Securities and Exchange Commission Thursday noting that it now owns 11.45 million shares of Cablevision stock, or about 4.9% of its outstanding shares. That makes Harbinger the fifth-largest shareholder of Cablevision outside of the Dolan family.

During its second quarter conference call with analysts on July 30, Dolan had said that the company was disappointed with the gap between public and private valuations of the company and that he and management would strive to close that gap. He also said that he would seek shareholder input on the company’s alternatives.

On Aug. 5, Cablevision issued a statement announcing that its board of directors had authorized the company to look at several strategies to boost value, including a share buyback or issuing a regular dividend.

In his Thursday note, Greenfield wrote that while there are likely several reasons for Dolan’s decision to meet with investors, “we believe one factor could certainly be the building presence of Harbinger—a well-known activist investor.”

Greenfield continued that the Dolan family “may be trying to head off a public ‘war-of-words’ in the media and/or proxy battle for the independent board seats at [Cablevision].”

Cablevision stock, up nearly 50% ($10.30 per share) since July 30, was up another 4 cents each in afternoon trading Thursday to $31 per share.

September