Cablevision to Buy Newsday for $650 Million

May 12, 2008  •  Post A Comment

Cablevision said Monday it will acquire Long Island newspaper Newsday from Tribune Co. for about $650 million. The deal is an attempt to boost revenue outside of its primary cable television operations and gain greater control of Long Island’s media outlets.
Cablevision, which has more than 3 million New York-area cable subscribers, will buy 97% of Newsday, the company said.
Cablevision outbid Rupert Murdoch’s News Corp. for the newspaper, which has an average weekday subscription base of about 335,000.
Cable companies such as U.S. leader Comcast and No. 2 Time Warner Cable are trying to increase revenue amid competition from satellite and fiber-optic television companies by expanding other businesses such as high-speed Internet and telephone services.
Cablevision, which owns New York’s Madison Square Garden, last week agreed to buy Sundance Channel from NBC Universal, CBS and Robert Redford for $496 million, adding it to a collection of cable networks that includes AMC and IFC.
Cablevision shares fell about 3% after the company announced the acquisition this morning.
“Acquisitions remain off point,” wrote Sanford C. Bernstein analyst Craig Moffett in a note to clients last week after the Sundance agreement was announced. “We continue to believe a return of cash to shareholders—preferably through aggressive share repurchases—would be the best use of cash for the company.”
Cablevision also said last week that its first-quarter revenue increased 10% to $1.72 billion on more cable subscribers. Excluding discontinued operations, its loss narrowed 6.9% to about $31 million.
Tribune said last week that Newsday, the Los Angeles Times and the Chicago Tribune had the largest first-quarter revenue declines among its newspapers. Sam Zell, who is selling Newsday to help pay down debt, took Tribune private in December for about $8 billion plus $5 billion in debt.
Cablevision outbid News Corp., which offered about $580 million for the newspaper and said last week it may increase annual cash flow by $100 million by combining some of its operations with its New York Post newspaper. New York Daily News owner Mortimer Zuckerman also made a bid for Newsday for about $580 million, according to published reports.
“I don’t think Cablevision will prevail,” said Murdoch on News Corp.’s earnings conference call last week. “Just be patient for a couple days.”


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