Early Reactions to Cablevision/'Newsday' Deal

Editor & Publisher, May 12, 2008 | Go to article overview

Early Reactions to Cablevision/'Newsday' Deal


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 1? 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. …

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