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Malone's Moves Put Spotlight on Cablevision

Stocks in this article: CHTR LMCA TWX NWSA MSG

It also means his falling out with Cablevision couldn't have been as bad as some observers thought. Why would the company sell part of itself, this reasoning goes, to someone whom its executives despised? Equally telling was Cablevision's decision to let slide a noncompete agreement with Rutledge that could have kept him from taking the Charter job in the first place.

Add to this mix the fact that Cablevision chairman Charles F. Dolan is now 86, and the perception that his son James is more interested in running the spun-off Madison Square Garden Inc. than serving as the company's president and CEO. Remember, too, that Dolan pere and Malone go way back. Not only have they done mutually beneficial deals together but Malone once sat on Cablevision's board.

Moreover, if the Dolan dynasty ever wanted some estate planning, who better than new Charter equity-owner Malone to draw up a tax-favorable deal to diversify the family out of its controlling interest in Cablevision? And if it's an operating successor the family seeks, who better than still freshly former COO Rutledge to take on that responsibility in addition to those he has at Charter?

Although a Charter-Cablevision deal has much to commend it, any such tie-up probably wouldn't be the end of the line. Much more likely is Cablevision's being used as so-called trade bait by Charter after a change in ownership. And the prospective trader most likely to be baited is Time Warner Cable Inc. The latter would love nothing better than to fill the gaps in its own New York footprint by adding Cablevision's 3.3 million subscribers in the tri-state area to the more than 1.4 million served by Time Warner Cable of New York and New Jersey.

The country's second-largest cabler would be highly motivated, in other words, to trade with a Charter-owned Cablevision in ways that, by rationalizing the New York market, rationalizes other markets as well. This seems likely to set off a wave of clustering, exiting and consolidating not seen since Malone first left the cable industry. His very return, in fact, signals the time is ripe to do the whole damn thing over again.

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