The Associated Press is reporting that the move to split Cablevision into two companies will be completed today. MSG — consisting of the Garden, Radio City Music Hall, the Knicks, Rangers, regional sports channels and other theaters — has been separated from the parent company Cablevision which will return to it’s core business of providing subscription television. This move has been widely seen as an effort to stabilize the value of Cablevision which has been impacted by the erratic profitability and valuation challenges of entertainment assets such as sports teams.
Although, the AP suggests that this move makes it easier to sell Cablevision (which includes Newsday, IMC, AFC and Sundance) and/or MSG, fans should not look for James Dolan to sell the team any time soon. It is reported that James Dolan is a great big fan of the Knicks and thoroughly enjoys running a sports conglomerate and prefers to work on MSG than Cablevision which was founded by his 83-year old dad, Charles Dolan. The more likely scenario is that Cablevision will eventually be sold in whole or part to Time Warner which was given a $10.9 million dividend to surrender its ownership stake previously.
The Dolans control about 70% of the shares for both companies. The shareholders will receive one share of MSG for every four shares they have of Cablevision in the split today. The division will allow the shareholders to benefit from Cablevision’s cash flow. Madison Square Garden stock, which is traded on NASDAQ is selling for about $18. The company is clearly worth more than $1.4 billion.
Cablevision is being extremely aggressive in reshaping itself to increase its value and paid consumer base. However, not all of its moves are producing the desired results. Less than a year ago, after Cablevision purchased Newsday for $650 million in May 2008, the company spent 4 million to renovate Newsday’s website and required readers to pay for the online content. Apparently, the effort has been a dismal failure as Newsday has attracted only 35 subscribers and realized $9,000 in revenue since erecting the paywall. The low number of subscribers at $5 a week does not account for the number of readers since the online content is accessible for free, as value added, to Cablevision customers and Newsday subscribers. The change does reflect the huge drops in the number of hits at the website which fell from 2.2 million to 1.1 million from October to December. The numbers also reflect the significant drop in readership for the Knicks Fix, Newsday’s Knicks blog, which once averaged over one hundred comments daily but now has about two or three per post.
Since purchasing Newsday, Cablevision has been at odds with the newspaper’s management, most famously engaged in a conflict with reporting about the New York Knicks which is owned by Cablesvision. As Cablevision increases its value, Newsday’s value seems to be an afterthought. According to Broadband DSL Reports.com, one insider said “We’re the freebie newsletter that comes with your HBO.”
Jump Balls and Time Outs:
Chris Duhon is returning to the starting line-up in tonight’s battle against the Sacramento Kings. . . . Knicks Fanatics is in discussions with Cablevision to become part of the new company. Unfortunately, my television won’t talk back hurting the possibility of the merger. . . . The Fanatic laugh track is turned on and up for anyone who actually believed that David Kahn was going to trade Rubio ot the Knicks by the February trade deadline. Ain’t happening, Gullibles. Kahn’s got a plan which is more than can be said for our management . . .