Shareholders of Cablevision Systems Corp. (NYSE: CVC) must be scratching their heads over the company's $650 million purchase of Newsday from Tribune Co., the latest in a long series of baffling moves by the Dolan family, which controls the New York-based cable company.The theory -- if you want to call it that -- is that Cablevision would be able to market the newspaper to its customers and that the company would be able to add additional content to its cable news channel. This makes no sense. People have stopped reading newspapers in droves. The only way that they would even consider subscribing is if Cablevision practically gave the newspaper away. Newsday could have struck an alliance with the cable channel to share content without the paper changing hands; these sort of deals happen all of the time.
Maybe advertisers will be more interested in Newsday now that Cablevision will be able to bundle ad space in the paper and its website along with cable commercial time. The problem, though, is that residents in Long Island have a plethora of media choices including the New York Times, New York Daily News and The New York Post. Like the readers, the only way that advertisers that aren't in the newspaper now would consider doing business with Newsday would be with steep discounts.
Maybe the Dolans are approaching Newsday the same way they are trying to revive their hapless New York Knicks franchise -- by throwing money at it. After sticking with the incompetent Isiah Thomas for too long, the Dolans reportedly are willing to pay Phoenix Suns coach Mike D'Antoni coach a whopping $6 million to revive the once-proud NBA franchise.
The fact that the Dolans outbid Rupert Murdoch for Newsday is pretty telling. The chief executive of News Corp., (NYSE: NWS), who paid a huge premium for Dow Jones & Co., had hoped to combine the paper with the company's New York Post. Such a combination would have made sense, far more sense than a sale to Cablevision.
But even Murdoch has his limits as does Daily News owner Mort Zuckerman -- who also was reportedly interested in Newsday. Too bad for the Cablevision shareholders who have seen the stock plunge more than 30% over the past year; the same can't be said of the Dolans.
Comfort Zone Investing: Keep your recovery expectations real
Will Americans have to slim down to fit into their cars?
Starbucks: The next McDonald's
Reader Comments (Page 1 of 1)
5-12-2008 @ 6:10PM
NewsVisual said...
In its second acquisition within a one-week period, Cablevision Systems Corp announced on Monday that it will acquire from the Tribune Company approximately 97 percent of the Newsday Media Group. The Group’s chief property is Newsday, one of the nation's largest daily newspapers, which serves Long Island and New York City. Cablevision valued the deal at $632 million, its statement said. “We admire Newsday’s strong editorial voice and reputation for quality as well as its leadership in print and online journalism. We are committed to maintaining Newsday’s journalistic integrity and important position in the marketplace,” said Cablevision Chairman Charles F. Dolan in the company’s statement. Yet there are many critics of the deal as well. NewsVisual reported on May 8 that there was considerable investor unease over the company’s strategic plan for growth. These concerns were addressed somewhat by the younger Dolan in the following statement: Cablevision President and CEO James L. Dolan continued: “Both Cablevision and Newsday are in the content, customer relationship and advertising business and we see this as a wonderful fit. Adding Newsday Media Group’s superb assets to Cablevision’s portfolio presents a multitude of opportunities: to provide consumers with additional quality content on multiple platforms; expand advertising opportunities for both entities; and attract a larger audience than either company could on its own,” said Cablevision CEO/President James L. Dolan.