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Cablevision: Take-Out Target?

Stocks in this article: CVC TWC VZ CMCSA

BETHPAGE, N.Y. ( TheStreet) -- The sudden departure of Chief Operating Officer Tom Rutledge at Cablevision (CVC) has analysts wondering if the company is a buyout target in the coming months.

Several analysts believe that with the highly regarded Rutledge's exit, the company could be a takeover target, as the Dolan family may seek an exit strategy in the coming months. Comcast (CMCSA) and Time Warner Cable (TWC) are two of the most logical buyers, according to Bernstein Research.

In a research note, Bernstein Research's Craig Moffett wrote, "TWC and Comcast could team up and divide the assets, as they did with Adelphia (TWC in that scenario would take New York City, Rockland, Westchester, and Long Island, and Comcast would take Northern New Jersey and Conneticut), but that sure wouldn't generate much of a bidding war." He rates shares of Cablevision at market perform with a $20 price target.

Deutsche Bank analyst Douglas Mitchelson noted that Rutledge has helped drive the strongest penetration and ARPUs (average revenue per user) in the industry, which could potentially be attractive to a potential bidder.

Rutledge has a one-year no compete clause in his contract, and according to a Reuters article, there is speculation he might join rival Charter Communications (CHTR).

Cablevision's video, broadband, and voice penetration are all significantly higher than the sector average. The company is generating $152 per month in revenue from basic video services, 14% higher than the $133 average, according to Mitchelson's note.

Mitchelson has a buy rating but lowered his price target to $20 from $26 on the news.

Evercore Partners analyst Bryan Kraft, who has an underweight rating on shares, wrote that although a decision to sell the company may not happen immediately, it does leave the door "more open" than it was before the announcement.

Cablevision shares were selling off Friday, down 10.5% at $12.46 in midafternoon trading on 10 times the average daily volume.

-- Written by Chris Ciaccia in New York

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