Taking issue with BusinessWeek on Time Warner & Cablevision

BusinessWeek ran an article in last Friday's edition discussing the Dolan family's low-ball bid for Cablevision Systems Corp. (NYSE:CVC) and how it could potentially open the door for Time Warner Inc. (NYSE:TWX) to step in and make a higher bid to acquire the company.

Normally this "after the report" article wouldn't even be noted, but this is still getting some discussion today and over the weekend and probably needs to be put to rest. This article is seemingly out of place in time right now, although down the road this could be interesting if Cablevision ever runs into trouble.

Companies like Cablevision are often thought of as poor private equity candidates because of the capital intensive operations that are required for cable and media build-outs. The new $30 offer made last week by the Dolans is still being dubbed as too low, and Banc of America just lowered the rating to Neutral in a research call this morning. CVC shares are currently at $28.36, so it is unclear how high a bid would have to be to win approval from Wall Street. Time Warner is also unlikely to put itself in a position where Wall Street thinks the company is going to overpay just to buy assets.

Cablevision has a current market cap of $8.3 billion and (as of the 9/30 quarter) it carried $12.2 billion in long-term debt in its $15.2 billion total debt. With Time Warner right at the launch of Time Warner Cable shares on NYSE (currently TWCAV on Pink Sheets), this might not be the best time for BusinessWeek to put issues like this on the table. Time Warner Cable and Comcast Corp. (NASDAQ:CMCSA) have just barely gotten past the closure of the Adelphia assets. The TWC shares, when they begin trading, will give Time Warner Cable some non-cash currency it can issue to do deals if it chooses, but a stock deal would actually give the Dolan's more control inside Time Warner Cable and its Time Warner parent. That is one point that would need to strongly be considered.