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Rainbow Moves To Pare Costs, Step Up Growth

Aug 4, 2003  •  Post A Comment

Rainbow Media Holdings hopes that last week’s consolidation of its cable channels American Movie Classics, Independent Film Channel and WE: Women’s Entertainment will position the networks to increase their audiences, launch new channels and take advantage of video-on-demand technology, said Josh Sapan, Rainbow’s CEO.
“Because we have an increasingly consolidated client base, we took several discrete groups and put them together in one group,” Mr. Sapan said in an interview. “It makes sense, given where the industry is.”
Rainbow, the content arm of cable operator Cablevision Systems, on Wednesday folded AMC, IFC and WE into a new group called entertainment services. IFC President Kathleen Dore, who has been with Rainbow since 1982 and has run IFC since 1996, will serve as president of the new group.
At the same time, Andrea Greenberg, president of Rainbow Sports Networks, will take on the additional responsibility of overseeing affiliate sales and marketing for all of Rainbow’s cable properties and video-on-demand services.
No layoffs were expected as a result of the reshuffling, Mr. Sapan said.
The reorganization comes six weeks after Rainbow fired 14 executives at AMC and WE, including AMC President Kate McEnroe, amid an accounting scandal in which Rainbow parent Cablevision Systems charged the executives with improperly booking marketing expenses in the wrong years to hold down costs.
The expenses, which total about $18 million for the three years in question, weren’t significant enough to warrant Cablevision’s restating its earnings. However, the Bethpage, N.Y.,-based cable operator is the subject of an investigation by the Securities and Exchange Commission.
The changes also coincide with Cablevision’s participation in a bid by Vivendi Universal Vice Chairman Edgar Bronfman Jr. for Vivendi’s U.S. entertainment assets. As part of Mr. Bronfman’s bid, Cablevision agreed to contribute AMC, IFC and WE to Vivendi’s cable assets in exchange for a stake in a newly formed company.
Neither Mr. Sapan nor the newly appointed executives would comment about the terminations or what role the firings played in the decision to consolidate the channels under a single leadership team. They also declined to say whether the reorganization affects Cablevision’s participation in the Bronfman bid.
Instead, they focused their conversations on the benefits of bringing the operations under one roof.
“This is a very opportune moment in terms of all of these brands being poised to take the next big step in growth,” Ms. Dore said. She added that by combining the channels, she hopes Rainbow will achieve enough scale to trim costs associated with buying and licensing films and producing original programming.
For her part, Ms. Greenberg said the latest changes represent the second phase of an effort that began nine months ago to consolidate affiliate sales and marketing operations.
“We felt this is the right time to further evolve marketing and affiliate sales,” Ms. Greenberg said.