Cablevision shares, among the sector’s worst performers over the past year, popped 2.5 percent yesterday after one Wall Street analyst forecast the company would be sold in the next 18 months.
Prospective acquirers include Charter Communications and Time Warner Cable, said Jason Bazinet, a Citigroup analyst, whose report pushed up the stock.
Neither company responded to requests for comment.
A Cablevision spokeswoman said: “As a matter of long-standing policy, Cablevision does not comment on rumor or speculation.”
Cablevision shares closed yesterday at $14.08, but are down 1.1 percent over the past 12 months while Charter is up 47.5 percent and TWC is up 18.8 percent.
Bazinet, in his report, outlines a scenario that could involve Cablevision’s equity falling to zero and says without Optimum West’s cash flow, the fundamentals have suffered.
Bazinet lowered his price target on Cablevision to $18 over the next year from $19.25 in part because of Cablevision’s pending sale of Optimum West (Bresnan Communications) to Charter and higher programming expenses.
“It will be very difficult for the [controlling shareholder family] Dolans to materially increase their ownership stake above current levels,” the report said.
Indeed, Cablevision is keeping the dividend in place, but may be more focused on debt reduction versus equity shrink,” Bazinet wrote in the report.
There is little incentive for the Dolans to stay the course, he wrote, adding: “If they fail, the equity could fall to zero. If they succeed, the equity value is unlikely.”
“We think the odds have increased dramatically that Cablevision is sold within the next 12-18 months,” he wrote.