A few cents worth on Cablevision's planned purchase of Newsday:
The big concern here in the newsroom is whether the Dolans will keep their hands off the editorial product. There's no answer to that until it happens, but the concern is obvious:
Local owners with local interests and local pals are more likely to want to massage the coverage than more distant owners. Owners without a history in the news business are less likely to honor traditional boundaries. Owners who started a family business tend to think they can do what they want with it. And the impression you get is that Jim Dolan hasn't really been hands off with the Garden and the Knicks.
On the business side: The Dolans are the latest in a succession of owners who thought they had brilliant ideas on what to do with the paper -- from TV/newspaper synergy, to hyper-local focus, to highly-leveraged tax strategies.
It hasn't been just putting out a really good full service paper for a while, and none of these brilliant ideas have reversed circulation and revenue declines. Now, Cablevision represents a new, but not really tried, strategy accompanied by a rather high price.
In a smart breakdown of the deal, media analyst Alan Mutter at his Reflections of a Newsosaur blog notes that Newsday's 17 percent operating margin -- a mere $80 million or so -- is only half what Cablevision extracts from many of its (monopoly) businesses... which may not bode well for prospects for actually reinvesting in the paper.
He concludes that Cablevision is investing at a premium in an industry severely in decline based on a speculative idea of cross seeding content, circulation promotion and ad sales among cable TV, internet, phone and now print products -- while Rupert Murdoch and Mortimer Zuckerman were both probably better positioned to reap immediate benefits by consolidating print holdings:
"Unless Cablevision goes out and buys a second newspaper in the New York market, it has no opportunity to achieve the revenue gains or cost savings that could have been reaped by Mr. Murdoch or Mortimer Zuckerman, the publisher of the Daily News.
"Given the powerful reasons why News Corp. in particular should have purchased Newsday, why did Mr. Murdoch reverse course? Mr. Murdoch most likely concluded that (a) Cablevision is unlikely to pull off a successful quadruple-play with Newsday and (b) there was no need to over-pay for an asset in due course would come back on the market at a lower price.
"Rupe might be wrong. But I doubt it."
Comments (1)
this is the same company that thought buying The Wiz electronics outlet and Clearview cinemas was a good business move. Not to mention the three "optimum channels", that cost millions and were a bust. I switched to FIOS and now will cancel my Newsday subscription.