IPTV Programming News Featured Article
May 12, 2008
Cablevision Buys Newsday, Eyes Challenge to Verizon FiOS
By In a move that’s expected to help it challenge Verizon’s (News - Alert) fiber optic television network, Cablevision today announced a $650 million purchase of one of New York’s most widely read and profitable newspapers.
By outbidding other major media companies, including News Corp (News - Alert)., Cablevision executives reportedly have sewn up a deal for Newsday, long owned by the Chicago-based Tribune Company.
According to Cablevision President and Chief Executive Officer James L. Dolan, the media company and Newsday will combine strengths in advertising and news production.
“Adding Newsday Media Group’s superb assets to Cablevision’s portfolio presents a multitude of opportunities,” Dolan said.
Those opportunities could include providing consumers with “additional quality content on multiple platforms,” Dolan added.
The deal is expected to close in about two months, officials said.
Despite cutbacks, Long Island-based Newsday continues to rank among New York’s most profitable newspapers, earning almost $90 million last year on sales of $500 million. The New York Post is said to lose $50 million a year, by comparison, while the Daily News is believed to be marginally profitable. Newsday’s average weekday circulation is about 335,000.
For Cablevision, the partnership brings a strong print and online media group, officials said.
Cablevision officials said they would offer their company’s 2.3 million Optimum (News - Alert) Online high-speed Internet subscribers “new interactive and homepage opportunities.”
The company likely is eyeing a way to challenge Verizon’s ever-expanding fiber optic television network, FiOS (News - Alert), experts say.
Cablevision officials said they wanted to use Newsday’s expertise to develop “innovative solutions for advertisers with its newspapers, magazines and Web sites to ensure the best approach to promoting ad insertions on Cablevision’s 70 most popular cable channels.”
According to Cablevision Chairman Charles F. Dolan, Newsday’s editorial voice and reputation for quality will complement his company’s own news work.
“We are committed to maintaining Newsday’s journalistic integrity and important position in the marketplace,” he said.
Under the deal, Cablevision will have approximately 97 percent and Tribune will have approximately 3 percent of the equity in a partnership that owns Newsday. To form the new partnership, Tribune will contribute the Newsday assets, and Cablevision will contribute newly issued parent company bonds with a fair market value of $650 million on the contribution date. Bank of America has provided a firm commitment to provide $650 million of senior debt financing, guaranteed by CSC Holdings, Inc., to the new partnership. Of that amount, Tribune will receive $612 million in cash, an equity stake in the partnership valued at $20 million and another $18 million in prepaid rent under leases for certain facilities used in the business. In addition, Cablevision will provide additional funds to pay certain transaction costs.
Tribune Chairman and CEO Sam Zell said his company didn’t want to sever all ties with Newsday.
“This agreement enables us to maximize the value of Newsday and still retain an interest in this valuable asset,” Zell said.
Michael Dinan is a TMCNet Editor. To read more of his articles, please visit his columnist page.
