Updated from 8:29 a.m.

Cable stocks enjoyed a rare rally Monday after

Cox Communications'

(COX)

controlling shareholder made a bid to take the company private in a $7.9 billion deal.

Cox surged 20% after its the $32-a-share offer from its parent, closely held Cox Enterprises of Atlanta. The news ignited a buying frenzy in smaller cable companies and a solid rise in big rivals as well.

Monday's Cox surprise makes for an unexpected twist in cable industrymerger-and-acquisition activity. Cable stocks, suffering from lack of investor confidence over competitive threats and cash-flow forecasts, havebeen establishing 52-week lows. Even a series of solid earnings reports last week failed to buoy the sector.

The free fall came to a halt Monday. The offering price represents a 16% premium over Friday's closing price, the privately held Cox Enterprises said, and 14% over the 10-day average closing price for the stock.

But $32 per share is well below the 52-week high of$36.95 Cox Communications, the nation's third largestoperator of cable TV systems, established in January. The stock was trading above $32 in the latter part of2003.

Cox shares, which last month hit a 52-week low of$27.17, closed Friday at $27.58. In early morningtrading Monday, shares changed hands at $33.75,reflecting expectations, perhaps, that the offer wouldbe sweetened.

Meanwhile, shares of other cable operators surged. Long Island's

Cablevision

(CVC)

jumped 12% as buyout speculation settled on one of the smaller players in the industry. Shares of titans

Comcast

(CMCSA) - Get Report

and

Time Warner

(TWX)

rose in more muted fashion, adding 5% and 1% respectively. Debt-heavy

Charter

(CHTR) - Get Report

, fresh off settlement of a long-running Securities and Exchange Commission investigation, rose 4%.

"Our proposal represents an excellent opportunityfor

Cox Communications shareholders, giving them theability to receive a meaningful premium to recenttrading values," Cox Enterprises CEO James C. Kennedysaid in a statement. For Cox Enterprises, he said,"this is a chance to make a substantial additionalinvestment in an asset we know well. An increasinglycompetitive environment convinces us that futureinvestments in the cable industry are best madethrough a private company structure."

Cox Enterprises said it expected CoxCommunications' board would establish a committee ofindependent directors to consider the proposal andengage in negotiations with Cox Enterprises.

The offer comes as most cable industry M&Aattention was focused on

AdelphiaCommunications

, the bankrupt operator formerlycontrolled by the Rigas family of Coudersport,Pa.

Cox, Comcast (the nation's largest cable operator) and Time Warner (the second largest) were all expected to bid forat least part of Adelphia. But Cox Communications CEOJim Robbins said this summer that the company had no interest inacquiring all of Adelphia.

How the buyout offer for Cox will affect theAdelphia deal, and how it will affect cable stockvaluations in the longer term, remains to be seen.

Cox Enterprises, one of the nation's largest mediacompanies, had $10.7 billion in revenue in 2003,according to a company statement. Along with its cableTV holdings, Cox Enterprises owns newspapers,television stations and, through the publicly traded

Cox Radio

(CXR)

, radio stations.