Population Statistic: Read. React. Repeat.
Monday, May 12, 2021

There are two ways of looking at Cablevision’s $650 million purchase of Newsday from Tribune Co.:

1. Underlying the apparent mismatch between a dominant cable provider and an entrenched but struggling newspaper is a potentially lucrative synergy:

But even if the prospective deal has an element of vanity to it, Cablevision could make the following argument. It has roughly three million cable subscribers in Long Island, New York, New Jersey and Connecticut, while Newsday has about 300,000 subscribers. Cablevision’s customer relationships could help it sell more subscriptions, while overlapping ad sales forces at the two companies could result in cost savings. And Cablevision owns a 24-hour local news channel in Long Island, which could use the news gathering capacity of Newsday — and in theory cut costs.

This makes the acquisition of Newsday the equivalent of securing an established and dedicated advertising channel for Cablevision. Nassau County is prime demographic territory, so any additional inroads a media company can make and present to ad clients is extremely valuable.

2. In order to extract the maximum value out of its unwanted asset, Tribune owner Sam Zell orchestrated an elaborate competition among Newsday’s suitors:

The trick was for Zell to turn this into a bidding war. That was difficult at first. The three interested parties acted as if they had the upper hand. Cablevision did some tire kicking, but the Dolans didn’t make an offer. [New York Daily News owner Mort] Zuckerman reportedly made a lowball bid.

Zell turned up the heat by entering into negotiations with News Corp. to accept $580 million for a majority stake in Newsday. [Rupert] Murdoch clearly felt he had the inside track. He began courting Long Island’s political leaders whose support he would surely need to get the deal approved by the FCC in Washington. That’s because News Corp. already owns the [New York] Post and two New York City television stations.

It now appears Zell was using News Corp.’s offer to establish a floor for the bidding. Zuckerman soon matched News Corp.’s offer. Then Cablevision did what non-strategic bidders often do in such situations. It offered to pay a higher price than either newspaper publisher.

And viola, Newsday becomes a hot property. Where it goes from here under the Dolans’ stewardship remains to be seen.

by Costa Tsiokos, Mon 05/12/2021 10:41:13 PM
Category: Business, New Yorkin', Publishing, TV
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