Cablevision will pay 10-cent quarterly dividend

The decision by the diversified cable operator, which also owns Madison Square Garden in New York, follows closely behind Philadelphia-based Comcast Corp., which began paying a dividend in April in an effort to appease investors who think the stock is undervalued.

Russ Solomon, an analyst at Moody's Investors Service in New York, said the dividend actions from Comcast, the cable industry leader, and now Cablevision will put pressure on other operators such as Time Warner Cable Inc. to follow suit.

Bethpage, N.Y.-based Cablevision will pay start paying a quarterly dividend of 10 cents per share on Class A and B shares on Sept. 18, for a dividend yield of about 1.3 percent.

Cablevision has said its stock price doesn't fully reflect the value of its operations and that it would look into different options to close the gap. These include a sale or spin-off of assets, a special or regular dividend and a stock buyback.

Two years ago, the company paid a special, one-time dividend of $10 per share to Class A and B shareholders for a total of about $3 billion.

Chief Executive James Dolan said in a statement that the company would continue to explore "other options" for increasing shareholder value. Cablevision is controlled by the Dolan family, who owns about a fifth of the company but exercises 74 percent of the shareholder vote through a special class of shares.

This week, Cablevision went on a road show to talk with investors about potential strategies. One new business being considered is the management of other cable systems for a fee, one that doesn't involve any additional capital or risk for Cablevision.

The meetings prompted one analyst to question why Cablevision would suddenly step up communication with shareholders.

"Why have the Dolans suddenly become shareholder-friendly?" asked Richard Greenfield, an analyst at Pali Capital, in a research note. "What are the Dolans afraid of?"