The Critical 'I'

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Saturday, December 13, 2003

CABLEVISION: FOR SALE?
Despite insisting that the company's not for sale, Cablevision Systems Corp. President James Dolan pretty much put out the welcome mat to tirekickers by stating the theoretical selling price would be in the neighborhood of $15 billion.

Cablevision is something of a relic, in that it's a locally-based cable operator still in business when behemoths like Time Warner have swallowed up the rest of the cable television market from one coast to the other. Of course, having the greater New York City area as the local market goes a long way toward keeping the lights on. With 3 million subscribers in the country's largest metro zone, Cablevision has been well-positioned to grow into a pretty significant media company in the northeast, bolstered by their entertainment properties, which include the New York Rangers, Knicks, and Liberty, along with Madison Square Garden and Radio City Music Hall.

Those properties make a potential sale of Cablevision interesting. Time Warner is the only real option as a buyer: Not only do they have the financial wherewithall to pay the price, but they're the only strategic company that makes sense, as they're head-to-head with Cablevision in New York.

But consider: Would Time Warner be keen on taking on the Rangers and Knicks (along with the Liberty and the AHL's Hartford Wolf Pack) just as they're finishing off selling the Atlanta Thrashers and Hawks, and still in the process of finding a buyer for the Braves? As anxious as they were to dump the Atlanta teams, it'd be curious if they turned around and re-acquired another group of major league franchises. That said, New York market teams are a different ball of wax than those in Atlanta--guaranteed sellouts at premium prices, more marketing opportunities, etc. That largely goes for the arena venues too.

A possibility is for Time Warner to buy Cablevision, then try to divest itself of the sports teams, and perhaps even all the entertainment holdings, quickly. They shouldn't have a problem finding buyers, even if they hold out for premiums. It might seem shortsighted, in that by holding onto the properties they would have guaranteed broadcast content; but as long as that's set up contractually beforehand, it won't make a difference after a sale. Besides, if Time Warner were to end up as the dominant cable provider in NYC after all this, the teams and venues wouldn't have much choice in broadcast partner.