CHICAGO (AFX) -Cablevision Systems Corp. shares advanced Monday after the cable operator declared its long-awaited $3 billion special dividend.
Cablevision rose 28 cents, or 1%, to close at $27.53, down from a session high $28.65.
Cablevision said late Friday that the dividend of $10 a share would be payable April 24 to holders of record April 18.
The dividend will be paid from a distribution of about $3 billion from Cablevision's CSC Holdings Inc. subsidiary. CSC will obtain the funding with debt from a credit agreement that closed last month.
Founder Charles Dolan and his son James, the company's chief executive, recommended payment of the dividend in October, when they decided to withdraw their proposal to take the company private.
Analyst Craig Moffett at Sanford Bernstein & Co. maintains his market-perform rating on the shares.
However, Moffett wonders whether it is a good idea for Cablevision to take on more debt when the company is facing 'increased competitive pressure' in its markets from Verizon . The phone company recently launched a video service that it can bundle with broadband and voice offerings.
After the dividend, Moffett estimates that Cablevision's debt leverage will rise to a multiple of 7 times earnings before interest, taxes depreciation and amortization from 5.8 times.
The analyst says Cablevision could sell such assets as the AMC, Independent Film Channel or We: Women's Entertainment cable networks to repay debt. This story was supplied by MarketWatch. For further information see www.marketwatch.com.