Long-shot Newsday bid may prevail
NEW YORK - Not for the first time, and probably not for the last, Wall Street is wondering just what the Dolans are thinking.
Like many actions taken by the Dolans, the family that controls Cablevision Systems, based on Long Island, and a host of New York properties like Madison Square Garden, the Knicks, and the Rangers, their recent bid to buy Newsday from the Tribune Co. for $650 million has resulted in a collective head scratch.
That offer, once considered a long shot, was thrust to the front of the line over the weekend when News Corp., controlled by Rupert Murdoch, pulled its bid, saying it would not raise its offer.
That left Cablevision with the prevailing bid. An announcement of a deal could come as early as this morning, said a person involved with the negotiations.
The Newsday bid had the backing of both Dolans: James L., the chief executive, and his father, Charles F., the company founder.
About two weeks ago, both Dolans flew to Chicago to meet with Sam Zell, the chief executive of Tribune, and yesterday Cablevision's bankers and lawyers were finishing final deal points.
The Newsday bid has come amid a flurry of deal activity from Cablevision after an unsuccessful bid by the Dolan family last fall to take the company private. Most analysts question the rationale for buying Newsday.
"We've seen this movie before," said Craig E. Moffett, an analyst at Sanford C. Bernstein & Co. "Jimmy made the comment the other day that their shareholders pay him to grow the company. Maybe he believes that, I don't know. Shareholders pay him to increase shareholder value."
Last week, the company spent $496 million in stock and cash to acquire the Sundance Channel, a deal that was tepidly accepted by analysts. Previously, the company flirted with taking a large stake in AEG Live, a concert promoter. That deal fell through.
Cablevision's Newsday bid had a touch of audacity to it, coming as it did after offers from two newspapermen: Murdoch, whose News Corp. owns The New York Post, and Mortimer B. Zuckerman, owner of The Daily News in New York. Both Murdoch and Zuckerman bid $580 million, or $70 million less than Cablevision.
"If you look at The Post and Zuckerman's bid, there are real synergies there," said Jill A. Greenthal, of the Blackstone Group.
The Dolans refused to comment for this article. 