Fund manager Mario Gabelli is to vote his fund's stake in Cablevision Systems against a $10.6 billion buyout of the New York-area cable operator and entertainment group, according to a regulatory filing.
Cablevision agreed earlier this year to be taken private in a $36.26-a-share bid from the Dolan family, which owns 20% of the company's common stock.
Shareholders are due to vote on the proposal on October 24.
Gabelli said at the time the deal was struck that the offer undervalues Cablevision's assets by $15 a share, or more than $4 billion.
Cablevision owns Madison Square Garden and its pro sports teams, the New York Knicks (basketball) and Rangers (ice hockey). The company also operates New York's famed Radio City Music Hall and the Beacon Theater, and owns and operates the Clearview Cinemas movie theater chain.
In the filing by Gabelli's firm Gamco Investors dated Friday, the fund said it planned on "voting against the issuer's proposed going private transaction at the issuer's upcoming special meeting of shareholders." The "issuer" is explained in the filing as referring to Cablevision.
"We believe our clients are best served by staying the course in Cablevision," Gabelli wrote in a letter to Cablevision chairman Charles Dolan dated October 8. The letter was posted on Gamco Investors' Web site under a section entitled The Gabelli Blog.
Gamco, Gabelli and related funds have an 8.3% stake in Cablevision according to Friday's filing.
Another shareholder who has in the past expressed doubts the bid reflects the true potential value of Cablevision, is T Rowe Price.
Craig Moffett, an analyst at Sanford Bernstein, recently said in a note to clients that questions remain with respect to whether or not shareholders will support the deal.
For the Dolan bid to succeed it has to be approved by the holders of a majority of the outstanding shares of Cablevision Class A common shares held by unaffiliated (non-Dolan) shareholders such as hedge funds and others.
Cablevision disclosed in a filing with U.S. regulators last month that the Dolan family was considering ways to reduce the company's leverage after the deal closes, which could include selling assets, entering into strategic partnerships, cutting operating expenses or discontinuing businesses.
It was considering those moves in anticipation of higher borrowing costs as a result of unsettled conditions in the credit markets.