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Cablevision Holders Pull Plug on Deal

Investors reject the Dolans' $10.6 billion buyout plan.

Cablevision (CVC) shares took a hit Wednesday as the company's buyout plan was shot down by shareholders.

The Bethpage, N.Y., cable company says shareholders rejected a $10.6 billion offer by a group of investors led by the founding Dolan family.

News of the latest take-private defeat sent Cablevision shares down as investors ponder the prospects for a company facing increased video competition on its home turf from phone giant

Verizon

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.

But Cablevision executives were upbeat, characterizing the rejection as a positive vote for the company.

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"While we are disappointed that shareholders did not approve the transaction, there is really nothing negative about today's outcome," the Dolans said in a press release. "In fact, in many ways, it is a very positive event. We see today's outcome as a vote of confidence in the prospects of Cablevision."

The Dolan group -- led by chairman and founder Charles Dolan and CEO son Jim Dolan -- already owns about 20% of the company.

The latest bid, which would have paid investors $36.26 per share, is the third failed attempt by the Dolans to take the nation's No. 6 cable shop private.

The first offer came in June 2005, when the Dolans floated a $7.9 billion buyout plan that was later sunk by the board. That deal promised to pay stakeholders $21 a share in cash, a 24% premium for Cablevision holders at the time. The plan called for Cablevision to spin off its media and entertainment properties into a separately traded Rainbow Media venture.

In January, a $30-a-share bid failed to win board approval. Last October, the Dolans offered $27 a share to take the company private.

Many top shareholders had spoken out against the latest deal, leading to speculation that it would fall through. Ahead of the shareholder vote, shares closed Tuesday at $31.86, well below the offering price.

The stock recently was down 59 cents, or 1.9%, to $31.27.

Cablevision was one of the leaders among cable companies offering the triple-play service package of phone, TV and Internet to users. But fiber optic network expansion by telco rival Verizon has delivered a competing service bundle of TV, phone and fast Net service.