MediaBlog

NEW YORK We will be monitoring reactions today to Tribune’s just-announced sale of venerable Newsday of Melville, N.Y. to Cablevision, after News Corp. dropped out.
Here is an early sampling.
* James Madore in Newsday: A purchase of Newsday by Cablevision Systems Corp. represents a marriage of “old” and “new” media that some experts said could in the long run help both. For starters, the cable provider’s television, Web and phone services require content, which Newsday could provide, experts said. “Being owned by an Internet service provider company opens up a range of options for a newspaper to generate revenue from people accessing the Internet,” said Tom Rosenstiel, director of the Project for Excellence in Journalism, a think tank in Washington.
“Revenue from the Internet service can go to underwrite the content.” Rosenstiel recalled that cable TV pioneers such as Charles Dolan became successful by creating programs that viewers were willing to pay for by becoming cable subscribers.
Dolan understood the link between quality content and growing the number of subscribers, he said.
* Alan Mutter in his Reflections of a Newsosuar blog: Cablevision’s bold plan to purchase Newsday will test as never before the concept – and the economics – of the hyper-consolidation of local media by a single company. Don’t count on it succeeding. By adding the dominant Long Island daily and the free amNewYork to the largest and most highly concentrated cluster of cable systems in the country, Cablevision has the potential to become nearly all things media to many of the more than 4.5 million households and 600,000 businesses who use its cable services in New York, New Jersey and Connecticut. In addition to delivering the triple-play services of television, Internet and telephone, CableVision now intends to augment its arsenal with Newsday’s circulation of 387.5k daily and 454.2k on Sunday, plus the 310.3k free copies of amNewYork that are distributed weekdays in Manhattan and the neighboring boroughs.
This not to mention News 12, the local television news channel fed to Cablevision subscribers in the Tri-State Area and such legendary venues as Madison Square Garden, Radio City Music Hall and the Clearview Cinemas chain of movie theaters.
The strength of Cablevision’s pre-Newsday strategy is revealed in the 11.3% surge in sales that lifted its revenues to just short of $6.5 billion in 2007. Its operating earnings grew almost 1½ times faster than its revenues, generating more than $2 billion in cash flow, much of which is earmarked for servicing the $11.6 billion in debt that makes Cablevision one of the most highly leveraged companies in the media business.
In contrast to Cablevision, which has been growing briskly despite direct competition from Verizon for nearly every one of its existing and potential triple-pay customers, business at Newsday, like that of most newspapers, has been deteriorating rapidly and uncontrollably for the last four years. http://newsosaur.blogspot.com
* Tim Arango and Richard Perez-Pena, The New York Times, www.nytimes.com Not for the first time, and probably not for the last, Wall Street is wondering just what the Dolans are thinking. Like many actions taken by the Dolans, the family that controls Cablevision Systems, based on Long Island, and a host of New York properties like Madison Square Garden, the Knicks and the Rangers, their recent bid to buy Newsday from the Tribune Company for $650 million has resulted in a collective head scratch…. The Newsday bid had the backing of both Dolans — James L. Dolan, the chief executive, and his father, Charles F., the company founder — even if the two still have an uneasy relationship.
Three years ago, father and son fought publicly over the fate of an expensive satellite project called Voom, a favored venture of the elder Mr. Dolan’s; when it lost millions, his son shut it down. About two weeks ago, both Dolans flew to Chicago to meet with Sam Zell, the chief executive of Tribune, and on Sunday, Cablevision’s bankers and lawyers were in Chicago finishing the final deal points. Both Dolans have attended meetings about Newsday, but the tension between the two has been obvious, said one person present who was granted anonymity because of the confidential nature of the discussions.
The family has been a lightning rod for public criticism — not least of all because of the soap opera that has been the Knicks — and the father is known to laugh off the words of critics, while the younger Mr. Dolan is more thin-skinned. The Newsday bid has come amid a flurry of deal activity from Cablevision after an unsuccessful bid by the Dolan family last fall to take the company private in a $10.6 billion deal. Most analysts question the rationale for buying Newsday and had hoped Cablevision’s quest failed. But when it comes to the Dolans, the only thing that is predictable about them is that they are unpredictable.
“We’ve seen this movie before,” said Craig E. Moffett, an analyst at Sanford C. Bernstein & Company. “Jimmy made the comment the other day that their shareholders pay him to grow the company. Maybe he believes that, I don’t know. Shareholders pay him to increase shareholder value. Even if you squint hard enough to justify these deals, it isn’t what shareholders signed up for.” Last week, the company spent $496 million in stock and cash to acquire the Sundance Channel, a deal that was tepidly accepted by most investors and analysts.

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