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Marianne Paskowski



What’s Up With Cablevision Buying Newsday?

May 14, 2008 11:21 AM

Wall Street analysts remain baffled over Cablevision System Corp.’s $650 million purchase of Newsday Media Group from Tribune Co. earlier this week.

They’re asking what does a cable multiple system operator know about the challenging, if not daunting, task of running a profitable newspaper in these times? Most newspapers are not profitable.

Then analysts ask why Cablevision is on a shopping spree. Remember, a week earlier the MSO acquired the Sundance Channel for roughly $500 million.

CNBC’s “Fast Money” team thought Cablevision is not treating shareholders fairly. The Dolan family, owners of Cablevision, have all of the voting shares.

One frustrated analyst said the real play here is for Cablevision to spend money, drive the stock down and once again try to take the company private, something it has attempted to do several times before.

Do you buy that conspiracy theory? I do not.

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Comments (16)

cruiser:

Yo Blondie --

So? You didn't say why you don't buy the conspiracy theory. Driving down the stock price makes sense to me.

Add an unprofitable newspaper to a nonsensical mix of investments and what else can you get? Owning a newspaper for the Hearst-like prestige? The chance to mold minds and public policy? A selfless contribution to the public weal? From Cablevision? What is this, the cable fantasy channel?

Cruisin not bruisin

Marianne :

Cruiser,

OK. I don't like the conspiracy theory because the smart money never bets against the dysfunctional Dolan family. As goofy as they are, they always win.

They, the Dolans, play head games. Maybe there is some synergy with Cablevision's News 12 and the steep priced the MSO paid for Newsday.

Chuck Dolan will put one of his kids in charge of Newsday and watch the fun, and the selloff.

Thanks for the post,
mp

Dr. Foster K.Williamson, Ph.D.:

Dear Ms. Paskowski:

Detailed econometric analysis of the Long Island market and sidereal influence on demographic trends suggests that Newsday could be a stunningly profitable investment.

We at the Institute expect, for example, that the imminent discovery of oil and natural gas deposits in the Hamptons, natural nitrification of the Long Island aquifer turning groundwater into 20 proof "commuter cocktails," and classification of Suffolk County as an underdeveloped, aid-worthy Third World region will enhance Newday's cash flow.

Then, applying our proprietary KZ Coefficient model to extrapolations of Long Island education levels and voting patterns implies that converting Newsday into a cable TV channel guide will increase net cash flow, readership, and, conincidentally, Republican Party registrations.

Long Island's "education czar," appointed by Eliot Spitzer, has already stated the goal of the region's high school students being able to read TV Guide without moving their lips. Newsday and Republicans are likely to benefit exponentially from such a bold Democratic Party liberal initiative.

Sincerely,

Dr. Foster K. Williamson PhD

Marianne :

Oh Doc,

Again you leave me speechless. My advice to you and anyone else following this thread, is just look at the tape. CVC is marginally up for now.(I don't play media stocks, pointless)

What does that mean? I don't know, I don't care, I don't play with $20 chump change media stocks.

I prefer fertilizer, natural gas and solar.

Anyhow, thanks, I think for your post,

Marianne

Dr. Foster K.Williamson, Ph.D.:

Dear Ms. Paskowski:

At the Institute, we do know what fertilizer is made from.

Sincerely,

Dr. Foster K. Williamson PhD

Marianne :

Doc,
You got that, headlines like this.
mp

FiOS lover:

What’s Up With Cablevision Buying Newsday?

1-The Knicks will finally get some good press ?
2-Free advertising for Optimum ?
3-Replacement job for Isaiah Thomas?
4-stop Verizons FiOS advertising ?

Other than that, who the heck knows ?
LOL.......

Marianne :

Hi FiOS lover,

Nah, none of the above. Never a negative word in Newsday about Cablevision and its dysfunctional owners.

mp

When you have so much personally that you can't EVER hurt your lifestyle, you play with the rest.

It becomes a game of ego vs ego, challenges over a drink following challenges exchanged on the back nine.

Trouble is that many lives are affected as companies are sold, traded, and combined.

In this case, we will never know the why of it, only the end result.

My guess, the motive(s) is selfish, working people will get hurt and another long standing entity may disappear below the horizon.

I hope I'm wrong.
Peter Bright

Marianne :

Hi Peter,
Perhaps Newsday is a trophy for Cablevision. The MSO outbid Murdoch for God sakes.

Newsday staffers have one ray of hope, the newspaper will be under the management of Cablevision's Rutledge, an excellent executive.

Having said that Cablevision probably overpaid and , yes somebody, Newsday staffers, will pay the price
Marianne

....And Murdock and his people are known to challenge only to cause the other party to pay more than they should with intent to weaken the buyer in the long run....
PB

Marianne :

Peter

I read Cablevision withdrew its first bid, privately told people it wasn't interesting and then came back in what was a bit of surprise. And God knows where Zuckerman was, maybe he couldn't come up with the scratch.

M

eric:

yeah jim dolan is not a super ceo, but for the most part he has excellent people working for him and thats what really counts!
CVC likely did overpay, but i believe they will make it work. they have the tools, i.e. product packaging, sales/telemarketing strength, cross-promotional reach, local news brand extension, and innovative product management that will re-grow the newsday subscriber base by, i predict, an additional 150,000 within two years. remember they have been under-estimated often before, like the phone business where they are beating the best in verizon!!!

Marianne :

Hi Eric,

You seem to know this company. I do, too. The only way, and I think Cablevision can do this, is to offer a bundle, adding on Newsday to its triple play. I just wonder why Patricia Gottesman left at such a dynamic time for the company.

I don't know why she left or was let go, or whether it was a mutual decision, but she could really thrive with the new challenge.

Nobody understands the Dolans, and they just love that. I'm not betting against them, but I wouldn't own this two-bit stock. I don't own any media stocks.

I prefer to make real money in fertilizer, dry shipping, railroads, steel, coal, etc, and a little of Apple and Research in Motion, two companies I never ever write about.

I feel for the folks at NBC today with the GE announcement that it's dumping the appliances, and possibly more divisions later. Immelt has not moved the stock in seven years!

Thanks for your post,
Marianne

Hi Marianne,

As I follow along this thread not knowing much about Cablevision, it seems to me one of their core competencies is also key to newspaper profits: local advertising. If Cablevision can capitalize on the scale economies of the companies' two sales forces, and if they can give Newsday's ad sales force a clear sense of the paper's editorial mission, re-positioning Newsday as the must-read paper among key geo-demographic audiences they already own via cable, this could be a good synergistic play for them.

As for NBCU? This is the company that jettisoned The West Wing for The Biggest Loser, and that's what they've become.

Marianne :

Cory!
Love the dig at GE, the Biggest Loser, oh so sad, but oh so true.

Now back to the Dolan thing. Newsday, in Long Island, a place neither Joel nor I would never live, thrives.

However, I think you're spot on about synergies, combing sales teams, etc. Still, there are daunting problems. I think Newsday offers most of its content free online.Almost every one does.

Murdoch would have been the better buyer. He would find a way for subscribers to pay for online. I know, he didn't do it with the New York Post.

Long before Rupert got the WSJ, I canceled my sub to the print edition, and bought the online edition.

It's far more facile, updated regularly, interactive, it's a blast. Love it.

I don't think the Dolans have it in their DNA to be that nimble.I'm just glad I don't live in Long Island.That paper will change.

From the Cape,

mp

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