360AM: Cablevision's Next Hurdle

360AM — Morning news briefing for Thursday, May 3 (Updated: 8pm ET)

A day after Cablevision‘s board accepted the Dolan family’s bid to take the company private with a $10.6 million offer (including their own shares worth $2.1 billion), the company reported another successful quarter this morning. Executives on today’s quarterly call with analysts declined to discuss the privatization move [see transcript from Seeking Alpha]. Cablevision’s first quarter earnings showed revenue growth of 12.5% (to almost $1.6 billion) over Q1 2006, 21.4% growth (to $481.6 million) in consolidated adjusted operating cash flow and 69.7% growth (to $176 million) in consolidated operating income. Q107 marked its 12 consecutive quarter of basic video subscriber gains and an industry-high 80% penetration in digital video service—but today all eyes are on its cash flow, "since free cash flow is an indicator of how much the Dolans can ultimately afford to pay for the company," notes the New York Post (with a priceless faux-to of Jim Dolan). Company shareholders are miffed that the board didn’t push for a better offer (up to $50/share, as Mario Gabelli gripes to the Wall Street Journal: "We believe the scale of justice has not been fully balanced in favor of our clients.") The key to the Dolans finally making an offer that passed muster was first reaching a deal privately with those independent board members, Thomas Reifenheiser and John Ryan, as the New York Times notes this morning. As the WSJ points out in a 2nd story this morning, "by holding out for a fair price, the independent directors have paradoxically done the Dolans a favor— by getting their deal done." Now the Dolans have to woo and win over cranky investors like T. Rowe Price Value Fund manager John Linehan, who represents more than 2.5 million Cablevision shares and beefs this morning in the WSJ: "I’m not happy… Now that we’re on the cusp of reaping significant cash flow they want to take it private." Update: Verizon shares rose 3.6% today after Cablevision admitted that FiOS marketing within its footprint was starting to have an impact. [Reuters]

Following Time Warner Cable‘s bright first quarter report yesterday as a standalone stock, Time Warner Inc.‘s board plans to review its options regarding its cable unit later this month. Chairman and CEO Dick Parsons said the company is optimistic about TWC’s future on yesterday’s call, dispelling rumors last month that the parent company was looking to sell its cable holdings. [Wall Street Journal] Other cable operators reporting 1st quarter results this morning: Charter Communications [PDF release | Reuters] and Insight Communications [Release]. Charter said it would improve customer notifications about outages in its San Luis Obispo market [San Luis Obispo Tribune].

DirecTV is ready to go with Sat-Go, billed as "the world’s first portable satellite TV system," for $1499. [Release]

Google‘s getting cozy with FCC chairman Kevin Martin, who reportedly visited the Web search behemoth at its Mountain View, Cali HQ yesterday. BusinessWeek checks in with Google’s DC lobbyist Richard Whitt, the former MCI-er leading its charge in the FCC’s wireless spectrum auction. "Google’s key interest here is in seeing fourth and fifth [broadband access] pipes to the home to compete with cable and telecom companies," says Whitt, who calls the auction "key to creating [more] competition. There’re potentially lots of folks who could come in." Martin has spoken favorably of the Google-led push for broadband competition to high-speed cable and DSL; and likes Google’s vision for nationwide wi-fi, as it’s developing with Earthlink in the Bay Area. Martin’s comment: "We need a real, third broadband competitor. The leading technology companies—Google, Intel, Skype, Yahoo, along with DirecTV and EchoStar—are the only parties that have promised to try to provide a national, wireless broadband alternative." Separately, Google has popped up as a potential rival (reports Bloomberg) to Rupert Murdoch now that the Bancroft family has rebuffed News Corp.‘s bid for Dow Jones.

Cox Communications is spearheading a consortium of cable operators to donate more than $12 million of advertising time to supporting New Orleans—whose mayor, Ray Nagin, is the former GM of Cox New Orleans. Facilitated by Adlink, spots promoting tourism in the Big Easy will run on Bresnan Communications, Bright House Networks, Cable ONE, Cablevision, Charter Communications, Comcast, Cox Communications, Insight Communications, Mediacom, Suddenlink and Time Warner Cable.

The Cabletelevision Advertising Bureau named ESPN‘s Ed Erhardt as its new chairman, replacing Comcast Spotlight president Charlie Thurston, whose term has expired. Thurston becomes secretary while Cox Media‘s Billy Farina and Lifetime‘s Lynn Picard become co-vice chairs and Insight Communications‘ Kevin Dowell becomes treasurer. The CAB board added three new members: Time Warner Cable ad sales president Joan Gillman, Suddenlink Communications‘ Kevin Stephens and Turner Broadcasting‘s Barry Fischer. [Release]

Comcast opens its second Connect-branded retail store with Circuit City in Burlington, MA, this weekend; the Wayside Commons location joins the first Connect store in Medord, MA. [Boston Globe]

Ahead of reporting earnings today, Gemstar-TV Guide announced My TV Guide, a personalized, cross-platform interactive program guide that encompasses the TV, the Web and mobile applications. Charter affiliates include Suddenlink Communications on the cable side, DirecTV and EchoStar on satellite TV and Verizon‘s FiOS telco TV business. The product will be demo-ed at the Cable Show next week in Las Vegas, and the earnings call [Seeking Alpha transcript] gave more color on how this product will generate incremental revenue, including advertising, for Gemstar.

BigBand also reported 1st quarter earnings. [Release]

Broadcom is acquiring Octalica for its MoCA capabilities. [Release]

Vonage‘s bid for a retrial in its patent dispute with Verizon was thrown out by a Federal Circuit court. [MarketWatch | CNET]

A&E is letting viewers program the network—for one night only, May 16—by picking which two episodes of The Sopranos it will air that night. Cast your vote at AETV.com/thesopranos. [Release] TCM also wants viewers to submit videos (posted to AOL) and vie online to become "Guest Programmer" and talk classic movies with host Robert Osborne. [Release]

CBS Corp. reported 1st quarter earnings this morning. [Release | Earnings call transcript, Seeking Alpha] One highlight: affiliate fees increased 5% reflecting rate increases and subscriber growth at Showtime and CSTV Network while TV license fees "decreased 31% principally due to the absence of the 2006 basic cable availability and off-network syndication sale of Frasier." Separately, CBS is being sued by ousted shock jock Don Imus for $40 million [Fortune], a suit that CNN legal analyst Jeffrey Toobin says Imus stands to win. CBS also tapped Brightcove for Web video duties. [Release]

Discovery Channel‘s mega-hit Planet Earth series is out on DVD in multiple formats—with the original narration of the BBC’s Sir David Attenborough. [Toronto Star]

HBO will tape Justin Timberlake’s Aug. 16 concert at NY’s Madison Square Garden for a Sept. 3 telecast, its first concert special since the Rolling Stones in 2003. [Hollywood Reporter]

ION held its first ad sales upfront event tonight in New York—here’s the release.

MSNBC‘s Chris Matthews hosts the first GOP presidential candidates’ debate tonight, with streaming coverage on MSNBC.com.

Retirement Living TV‘s radio show hosted by Lea Thompson is now on Sirius satellite radio. [Release]

Shalom TV launches today on Comcast VOD in Baltimore, greater Washington and Northern Virginia. [Baltimore Sun]

WWE reported 1st quarter earnings. [Release] CEO Linda McMahon reported on today’s Q1 earnings call that WWE’s April 1st WrestleMania 23 event drew a record 1.2 million pay-per-view buys and said the company will will start developing HD content in ’08. Separately, WWE is offering free tickets to Virginia Tech students for an area event this weekend.

Is Rosie O’Donnell headed to a cable news network gig? [NY Daily News]

Sean "Diddy" Combs talks up his MTV and HBO series.

Disney launched its answer to MySpace—an online social network for tweens (kids under 14) dubbed Disney XD, for Xtreme Digital—this week. [Reuters]

MTV launched realworldcasting.com, a site where aspiring Real World housemates can submit videos, while sibling MTVN net VH1 launched ILoveNewYork2.com, a casting site for its hit reality franchise, I Love New York.

– Shirley Brady

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