360AM: Dolans Take Cablevision Private
360AM — Morning news briefing for Wednesday, May 2 (Updated 8pm ET)
They’re certainly persistent. Following earlier attempts to buy back the company, Cablevision‘s founding family, the Dolans, will take the company private with an offer of $10.6 billion in cash that was accepted by the board this morning. [Details in the release.] News that Cablevision’s board was mulling the Dolans’ offer to acquire 100% of the company broke in the New York Times and the Wall Street Journal. The company’s board met last night to discuss the Dolans’ proposal which, including the company’s $12.5 billion debt, will cost the family approx. $22 billion. The transaction is subject to regulatory approvals and also requires approval by Class A shareholders excluding the family and company management. Their accepted bid, at $36.26 a share, is 20% higher than their last offer in January—the Dolans’ other rejected offers were $27/share in Oct. ’06 and $21/share in June ’05—and 10% higher than Cablevision’s closing stock price yesterday. Analysts expect the Dolans to unload Cablevision’s Rainbow Media Holdings programming assets, which helped finance this offer with Monday’s $570 million sale of its FSN New England and FSN Bay Area stakes to Comcast. Going private could be good for Cablevision customers; Kagan analyst Robin Flynn tells Newsday it would "free management to offer better entertainment packages and discounts." Cablevision filed an amended annual report on Monday that revealed severance payments of $64 million to CEO Jim Dolan and $28.5 million to his father, company chairman Charles Dolan, if terminated following a corporate change of control. With fellow cable operators Cox Communications and Insight Communications also now privately held, Sanford C. Bernstein analyst Craig Moffett commented to the WSJ: "Every cable company in America is going to generate so much free cash flow, none of them are going to remain in the public-equity markets unless their multiples expand dramatically." Update: Wall Street wasn’t thrilled by a Dolan-owned private Cablevision: Moody’s and S&P said they "may cut Cablevision deeper into junk territory," reports Reuters, while Fitch downgraded Cablevision and CSC Holdings to Rating Watch Negative, commenting: "Due to the leveraging nature of the transaction as currently envisioned Fitch expects a multi-notch downgrade of the ratings upon closing of the transaction."
Another family-controlled media company is making waves today: Rupert Murdoch’s News Corp.’s $5 billion bid yesterday for Dow Jones (and its Wall Street Journal) that will be fought by Dow Jones’ controlling shareholders, the Bancroft family, according to a statement. Murdoch isn’t giving up. He told Fox News Channel‘s Neil Cavuto, who’s heading up his pending business channel, that owning the WSJ would help that nascent effort: "There is a deal already with CNBC (and the newspaper). But we just want to have a business channel that lives up to the quality and traditions of The Wall Street Journal, and we think that if we can do that, we will do very well."
Time Warner Cable fared well in its first quarter as a publicly traded stock—with first quarter profit up 16% according to its earnings report this morning—and confirmed its 2007 financial outlook. The #2 U.S. cable operator posted a net profit of $276 million or 28 cents per share in the first quarter, up from $237 million or 23 cents a year ago. Revenue for the quarter ($3.85 billion) beat analysts’ expectation of $3.92 billion. It ended the quarter with 13.4 million basic video subscribers (51% of homes passed), 7.5 million digital video subs (56% penetration of basic video subs), 7 million residential high-speed Internet subs (27% penetration of homes passed) and 2.1 million digital phone subs (12% of homes passed). The performance lifted Time Warner Inc.‘s first quarter results today.
John Malone confirmed he has no intention to sell Discovery Communications during Liberty Media and Discovery Holding shareholders’ meetings yesterday. "Since Discovery has no plans to put itself up for sale, on a steady state basis, it looks reasonably properly valued by the market today," Malone commented. "If it were to put itself for sale, I think it could command substantially higher values. Hundreds of millions of dollars of synergies would exist if it were to combine with, say, Disney. And clearly Disney or Viacom would pay a premium price to realize their share of these synergies." Malone also dismissed Verizon and AT&T‘s video plans—unless they partner with DBS. "The combination of those service platforms is what will effectively compete with cable in a duopoly kind of setup." [Rocky Mountain News | Denver Post]
Comcast New Jersey officials were mortified by hardcore porn showing up yesterday on—of all networks—the Disney Channel‘s Playhouse Disney block, which was televising Handy Manny to the pre-school set. Comcast officials shouldered the blame, pointing to a head-end tech glitch. [WCBS] HDNet owner Mark Cuban blogs that Comcast.net‘s ad sales partnership with Yahoo is "the deal of the year."
• COMPETITION WATCH
Verizon licensed Gemstar-TV Guide‘s IPG software for its FiOS TV service and will enable remote DVR scheduling using TV Guide listings. [Release] Verizon launched its FiOS triple play and double play bundles in Tampa today. [Release]
• PROGRAMMING
Bravo had its best April for total viewers and total day in A18-49. [Release]
Cartoon Network has a new boss: Stuart Snyder, who had been running Turner Broadcasting‘s online games portal, GameTap, was named COO for animation, young adults and kids media, a new division that gives him oversight of Cartoon Network, whose EVP/GM Jim Samples stepped down in February following Adult Swim‘s Aqua Teen Hunger Force guerrilla marketing debacle in Boston. Snyder’s previous positions include president and COO at World Wrestling Entertainment. [Release]
Comcast released research it commissioned from Frank N. Magid and Associates comparing its HD picture quality to that of satellite TV providers. Survey says: more than 65% of the satellite-only customers polled preferred Comcast HD to DirecTV‘s high-def, while more than 70% rated the cable operator’s HD above Dish Network‘s HD. Among dual subscribers to satellite and cable, more than 60% picked Comcast HD above DirecTV HD and more than 66% preferred Comcast HD to Dish Network HD. The survey has a 5-7% margin of error. [Release]
GSN celebrates Bob Barker’s career in on-air tribute week of May 15. [Release]
Hallmark Channel owner Crown Media Holdings renewed the network’s affiliation agreement with the National Cable Television Cooperative. Crown Media Holdings president and CEO Henry Schleiff alluded to reaching a "fair price" while NCTC president and CEO Jeff Abbas said Hallmark Channel "has been one of the most launched calbe networks by our [1100 member companies] the past few years." [Release]
Saturday’s HBO pay-per-view bout between Oscar De La Hoya and Floyd Mayweather Jr. will be seen in 176 countries and could become one of the highest-grossing fights in history, worth more than $100 million. HBO’s reality series leading up to the Super Bowl of Boxing has averaged 1.2 million first-time viewers (not counting repeats or On Demand views) and wraps tomorrow night. [USA Today]
ImaginAsian TV launches on Cox Communications’ Northern Virginia system next month.
NBCU is the first advertiser to use TiVo‘s advertising platform to promote VOD content. Starting tomorrow, any time a TiVo subscriber records and views "certain crime/mystery genre television shows," a promo will appear for The Good Shepherd, the actor’s CIA movie that is part of NBCU’s Matt Damon on Demand promotion this month. Cable operators can create a "Matt Damon" VOD menu category for the Universal movies (including the Bourne franchise) that hit VOD and PPV tomorrow. [Release] TiVo this week launched a My TiVo Gets Me ad campaign that includes TV spots and a user-generated video contest with YouTube.
SCI FI posted its best April ratings; details here.
TNT‘s NASCAR 2007 theme song: Born to Be Wild. [Release]
The Weather Channel turns 25 today, prompting The State (SC)’s 25 reasons to love the network.
• ONLINE
The 11th annual Webby Award winners were announced with 2 winners in each category: the official Webby Award-winner and the People’s Voice winner. This year’s winners include VH1’s Best Week Ever (P.V., Celebrity/Fan Website); PBS KIDS Sprout (co-owned by Comcast) Sprout Diner (Webby, Family/Parenting Website); Current TV (Webby, Television Website; the P.V. winner in this category: NBC‘s The Office site); Nickelodeon’s Nick.com (P.V., Youth Website); ESPN 360 Bar Sports (P.V., Interactive Advertising: Game or Application); Comedy Central’s Web series Honesty (Webby, Online Film & Video: Comedy); MTVN‘s AtomFilms Animator vs. Animation II (P.V., Online Film & Video: Animation); Bravo‘s Project Runway mobile WAP site (P.V., Mobile: News & Entertainment). Other winners include YouTube co-founders Steve Chen and Chad Hurley ("Person of the Year") and Verizon‘s Dave Matthews Band site (Webby, Celebrity/Fan Website) and Beatbox Mixer (P.V., Telecommunications Website). The 2007 Webbys will be presented June 5 in New York.
Bravo‘s Top Design series inspired more than 83,000 Cyworld virtual-worlders to create their own "Top Design" rooms. The online social network launched its NBCU-branded virtual world partnership with NBC‘s Passions, which is moving to DirecTV this fall.
here! will feature clothing provided by StarBrand Media on its original series Dante’s Cove; viewers can then purchase the clothes online. StarBrand also places and sells clothing with other networks including Showtime and the CW. [Release] MTVN signed a similar deal with Delivery Agent Inc. to create online destinations where fans of MTV and Logo original series can purchase clothes featured in MTV’s The Hills and Laguna Beach and Logo’s Noah’s Arc on seenonmtv.com and seenonlogo.com. [Release]
The Weather Channel is teaming with another Landmark Communications-owned company, TotalVid.com, to offer Storm Stories on a download-to-own basis for $1.99 per episode (or as part of TotalVid’s $9.95 subscription package); It Could Happen to You will be added later this year. [Release]
• IN OTHER NEWS
Cisco and Scientific-Atlanta announced their Cable Show news and demos.
CommScope completed its acquisition of Signal Vision. [Release]
Leo Hindery’s InterMedia Partners will complete its $130 million acquisition of LIN Television‘s assets in Puerto Rico through $95 million in senior secured credit from CIT Group. [Release] Hindery last month testified on free trade before the Senate Commerce Committee and is an executive in residence at Columbia Business School.
Sinclair reported in its 1st quarter earnings that the scrappy broadcaster has renewed more than 80% of its retransmission consent agreements via long-term contracts with cable operators.
Sprint Nextel reported double digit growth in its cable telephone business in its 1st quarter earnings, with more than 1.7 million cable telephony subscribers, and that its Pivot-branded cellphone (created for the cable/Sprint wireless joint venture) is now in 10 markets. [Release | Seeking Alpha earnings call transcript]
Tandberg Television will demonstrated its OpenStream switched digital video system in partnership with Imagine Communications at the Cable Show next week in Las Vegas. [Release]
Op-ed column reactions today to the FCC‘s anti-violent TV plan and renewed a la carte push last week: thumbs up in the San Francisco Chronicle, thumbs down in the Los Angeles Times.
