Updated from 7:30 a.m.

The Dolan family reality show is back and better than ever.

The family that controls Cablevision ( CVC) backed out of a plan to take the Long Island-based cable company private and demanded a big dividend. The moves sent Cablevision shares down sharply Tuesday.

The Bethpage, N.Y., company issued a statement Tuesday morning saying its board had received a letter in which CEO James Dolan and his father, founding Chairman Charles Dolan, withdrew their June 19 offer to take Cablevision private and spin off its Rainbow Media unit. Cablevision also said the Dolans recommended the board consider a one-time $3 billion dividend. The board said no decision has been made on the dividend and it is considering the proposal.

The news hit Cablevision shares, sending them down 13% early Tuesday. The stock has been in decline anyway since the Dolans goosed it in June with their buyout offer.

Shares of the No. 6 cable company jumped 19% in a day after the Dolans said they would pay $7.9 billion for the 80% of the company they don't own. The proposed deal would have paid stakeholders $21 a share in cash, along with shares of the long-anticipated spinoff of media and entertainment assets into separately-traded Rainbow Media. Those holdings are worth an additional $12.50 a share. The price represented a 24% premium over Cablevision's closing level the day before.

Cable sector stocks have been under pressure this, year leaving industry chiefs squirming for solutions. Squeezed by satellite TV services like EchoStar ( DISH) and DirecTV ( DTV), and following similar moves by cable leaders like Cox, the Dolans' offer to take the company private was seen as a strategy to attract higher bids or break up the media and cable assets.

After the acrimonious Voom fiasco and a controversial dark-horse bid for Adelphia's cable systems, the Dolans seemed to have finally found a business route that even they could agree on.

But the move failed to lure big buyers like Time Warner ( TWX) and Comcast ( CMCSA).And in their own Tuesday morning press release, they indicated that they just want to treat all shareholders equitably.

"Despite good faith negotiations over the past four months, it has become clear that we will be unable to reach agreement with the Special Transaction Committee on the terms of our proposal," they said.

"We continue to have full faith and confidence in the near and long-term prospects of the Company and remain committed to the goal of providing value to all shareholders," the Dolans said in their letter to the Board. "In addition, we recognize from the strength of the financing commitments received in connection with our proposal that the credit markets currently value the Company's growing cash flow to a greater extent than the equity markets. This recommendation is driven by a desire to treat all shareholders equally, to provide clarity for the Company's security holders and to take advantage of the robust credit markets and attractive interest rate environment."

Given the Dolans' 20% stake in Cablevision, a $3 billion dividend would net them in the neighborhood of $600 million.

On Tuesday, Cablevision was down $3.38 to $24.12.

More from Technology

How Technology Will Unleash the Legal Marijuana Industry's Growth Potential

How Technology Will Unleash the Legal Marijuana Industry's Growth Potential

Apple Shares Gain as U.S. and China Call Off Trade War, For Now

Apple Shares Gain as U.S. and China Call Off Trade War, For Now

Tesla Shares Jump on New $78,000 Model 3 Plan, China Trade War Truce

Tesla Shares Jump on New $78,000 Model 3 Plan, China Trade War Truce

Tesla's Supercharger Network Is Booming -- Here's Why That's a Concern

Tesla's Supercharger Network Is Booming -- Here's Why That's a Concern

Attention 60 Minutes: Google Isn't the Only Big-Tech Monopoly

Attention 60 Minutes: Google Isn't the Only Big-Tech Monopoly