Is silver-haired media investor Mario Gabelli playing matchmaker?

In an interview, he says that it’s about time Cablevision get down to business and hook up with Time Warner Cable. Gabelli, who runs hedge fund Gamco Investors,  a top Cablevision shareholder, tells Bloomberg the family run cable operator and networks company should be “making love with Time Warner Cable.”

Gabelli’s proposal goes much further than the potential moves proposed by Cablevision CEO Jim Dolan. Not content with just a stock buyback or a dividend or even just spinning off some businesses, Gabelli suggests Cablevision should do nothing less than break up the company and hand over the cash to shareholders.

It’s no secret how Time Warner Cable has coveted Cablevision’s New York area cable systems. On more than several occasions over the past decade, Time Warner has held talks to varying degrees to snatch the systems.

From Bloomberg: “They have made a commitment to follow through,” said Gabelli, who two days ago called on Cablevision to sell Rainbow and use the money to buy back stock. “If they don’t, there are board seats available.”

We bet he’ll be pressing his case at a series of investors meetings the Dolans are planning to hold with top investors.

And how happy would he be if Jim Dolan came through this time?

Bloomberg: Breaking up the company would be “like hitting a grand slam home run in the bottom of the ninth inning of the seventh game of the World Series,” he said.

(Photo: Reuters)

Citi’s warm embrace of auction-rate securities has come back to haunt it. The bank, by far the largest underwriter of auction rate munis, a major subset of ARS’s, today agreed to buy back more than $7 billion worth of ARSs,and pay $100 million in fines. Other banks facing accusations of fraudulent marketing of the now unwanted securities, include Merrill Lynch and UBS, the Swiss bank.

American International Group shares tumbled another 17 percent on Thursday, the day after the insurer reported its third multibillion-dollar quarter loss. Total losses for the last three quarters now amount to $18 billion, fueled by a portfolio of mortgage-backed debt. The performance prompted AIG boss Robert Willumstad, a former COO at Citigroup, to say “a less complex AIG will be a better competitor.” He will reveal how much less at a September 25 shareholder meeting.
Deals of the day:
** Russia’s United Company RUSAL will not fully merge with Norilsk Nickel before conducting its own share float and has no desire for a triple merger with steel firm Metalloinvest, its majority owner said on Thursday.

** Japan’s top securities firm Nomura Holdings Inc is in talks with British mid-cap stock broker Collins Stewart on a possible buyout, sources familiar with the matter said on Thursday.

** South Africa-focused platinum producer Lonmin said it would vigorously contest a $10 billion bid approach from miner Xstrata, but gave little sign of what steps it might take in its defense.

** Dutch utility Essent, which is looking for a foreign partner, said on Thursday profit from continuing operations slipped 4 percent in the first half of 2008. Nuon, the second largest Dutch utility, is also looking for a foreign partner. Last year, the two called off a 24 billion euro merger, with local media saying they could not agree to the size of their respective stakes in a merged entity.

** Leading Turkish media group Dogan Yayin Holding said on Thursday its Smile Holding retail business and U.S. firm Brightstar Corp had agreed to form a joint venture.

** Salzgitter raised its stake in Europe’s largest copper smelter, Norddeutsche Affinerie, to 10.8 percent by acquiring the city of Hamburg’s 5 percent holding, Germany’s second-biggest listed steelmaker said on Thursday.

** British mail order company Flying Brands said it has received a “very preliminary” takeover approach from West Coast Capital, the buyout firm co-founded by retail entrepreneur Sir Tom Hunter.

** Germany’s Continental is looking for allies in Asian emerging markets and Russia as a suitable white knight to fend off a hostile bid from rival Schaeffler, sources close to the matter said.

By most accounts, the sovereign wealth funds of Asia are licking their burnt fingers after picking up big stakes in sickly U.S. financials. So we read with interest a report in the NY Post that Lehman Brothers CEO Dick Fuld has held talks with South Korean and other Asian investors about possibly raising more capital. Smell a little Déjà vu? This would certainly be a hard sell for Fuld and Co., but with the dollar showing signs of recovery, and a dearth of cheap alternatives, they could just be tempted to try to catch the proverbial falling sword yet again, further confounding the conservative investment strategies they’ve built up over the past few decades of wealth generation.

What would you call a midsize Chrysler/Nissan car – a Chryssan, a Nissler? Ok, so neither is particularly witty or catchy, but branding is probably not behind what the two automakers are up to. The Wall Street Journal reports the automakers will jointly produce midsize cars, after agreeing in April that Nissan would build a small car for Chrysler using the North American automaker’s design and Chrysler would build a new full-sized pickup truck for the Japanese automaker using Nissan’s plans. The two companies have since been discussing an agreement under which Nissan would produce midsize sedans that Chrysler would sell in the U.S. under its own name, the Journal said, citing people familiar with the matter. Chrysler is evaluating whether it makes financial sense to partner with the company, the paper said.

Other deals of the day:

* Montagu Private Equity has hired Morgan Stanley to look at strategic options for BSN Medical, a move which could lead to a sale of the business for up to 1.7 billion euros ($2.64 billion), a person familiar with the situation said.

* Germany’s Deutsche Lufthansa is interested in holding intensive talks over a stake in Austrian Airlines with the Austrian government, executive board member Stefan Lauer said.

* HSBC Holdings denied a South Korean media report saying it had agreed with U.S. private equity firm Lone Star to set a new deadline for a $6.3 billion deal for control of Korea Exchange Bank.

* Neptune Orient Lines said it could finance a multi-billion dollar bid for rival Hapag-Lloyd, in spite of a 19 percent profit fall due to higher costs and tougher conditions which prompted investors to dump its shares.