Gabelli May Vote Against Dolans

Gamco Investors chairman Mario Gabelli sent another apparent signal that he may not vote in favor of the Dolan family’s $10.6 billion buyout proposal to take Cablevision Systems private, a development that could complicate approval of the deal.

On Oct. 8 Gabelli, whose investment funds own about 8.5% of Cablevision’s outstanding stock, sent a letter to Cablevision chairman Charles Dolan, praising his stewardship of the company. But Gabelli, who has publicly said that he thinks Cablevision is worth as much as $50 per share – well above the Dolan’s $36.26 per share offering price – ended the letter with what appeared to be an indication that he would not vote in favor of the privatization deal.

Gabelli’s vote could be crucial because the Dolan family has said a deal would require that a majority of the minority of Cablevision shareholders not affiliated with the family sign off on the transaction. The Dolan’s own about 80% of Cablevision’s outstanding shares, meaning that they would need more than 10% of non-family shareholders to approve the deal.

“All in all our clients – your shareholders – have prospered under your stewardship,” Gabelli wrote in the partially redacted letter that was posted on the Gamco Web site. “We are now asked to sell our shares to a buyout group led by you. Despite the likely challenges of FiOS, Google, a bidding war for the NY Yankees and so on and the concern of New York’s susceptibility to an economic slowdown, we believe our clients are best served by staying the course in Cablevision.”

The letter came four days after Gabelli filed a document with the Securities and Exchange Commission (on Oct. 4) stating that he was considering exercising his appraisal rights concerning the Dolans attempt to take the cable company private. That, some analysts believed, was a quiet attempt to pressure the Dolans’ to raise their price.

Cablevision has scheduled a special shareholders meeting to vote on the Dolan proposal for Oct. 24 at its headquarters in Bethpage, N.Y.

Cablevision declined to comment on the Gabelli letter.