After four months of negotiations, Charles and James Dolan--who control the company--were unable to reach agreement with a special committee of the company's board over terms for the transaction, the Dolans said in a letter to Cablevision's directors.
The Dolans' offer to take the company private was seen as a strategy to attract higher bids for Cablevision's cable assets. But the move failed to lure big buyers like Time Warner and Comcast. Cablevision was trying to move in the same direction as Cox, which earlier in the year went private.
Cable stocks have been under pressure--especially from satellite distributors such as DirecTV and EchoStar. Companies have been looking for all possible ways to raise shareholders' prices.
Financier Carl Icahn has battled with Time Warner to do just that. He wants the company to be more aggressive--he would like Time Warner to spin off a bigger piece of its Time Warner Cable unit, and is pushing the company to sell off a bigger piece of the company's AOL unit.
In the letter, Charles and James Dolan noted that media companies' values have declined--suggesting they would have liked to lower the original offer of $21 per share in cash for the cable business.
In addition, Cablevision planned to spin off its Rainbow Media programming unit. When the company made its plans back in June, shareholders responded by sending the stock up 19 percent.
That's because the entire deal--including the spin-off of Rainbow Media--would have given shareholders a 24 percent premium over the company's previous day stock price. In addition to $21 a share for the cable operations, shareholders would have received Rainbow's stock worth $12.50 per share. On Tuesday, Cablevision's stock closed at $24.47--down 12 percent.
As somewhat of a consolidation prize, the Dolan family recommended a $3 billion special dividend--figuring the news would be tough on the market. No matter. The market pushed the company down as punishment for its pullback.