Friday, August 15, 2008

Harbinger stake triggers charm offensive by Cablevision

Something is stirring at Cablevision, the cable giant and owner of the notoriously mismanaged New York Knicks. According to an article in the Wall Street Journal, CEO James Dolan "surprised" investors by announcing that Cablevision will explore options to boost its stock price. Also, top executives met with large investors for the first time in years to discuss the company's future. Most significantly, Cablevision today announced that it is paying its first quarterly dividend.

Why the change of course by a company that was unfazed by the "Dolan discount," or the difference in valuation between Cablevision and its peers, wich stems from the unpredictability of the company's controlling family?

Simple: Harbinger Capital Managment, an activist fund, acquired a 5% stake. Harbinger, which recently won seats on the New York Times' board, hasn't made public any demands, but its mere presence has been a boon to shareholders. Cablevision shares have been up as much as 28% this month. This demonstrates how, when it comes to improving corporate governance, hedge funds can be a force like no other.

Now if only Phil Falcone, who heads Harbiner, were a Knick fan.....

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