Cablevision completes acquisition of Newsday

Cablevision Systems Corp. this afternoon completed its $650 million acquisition of Newsday in a deal that creates a regional powerhouse for online and print news and advertising.

Cablevision acquired 97 percent of Newsday Media Group through the formation of a new partnership with Tribune Co., first announced in May. Cablevision said the deal "adds a complementary print and online media group with diverse, quality local content in the New York area."

Newsday Publisher Tim Knight will continue to oversee Newsday and will report to Cablevision chief operating officer Thomas Rutledge.

"We deeply appreciate Newsday's journalistic excellence, editorial voice and advertising value," Rutledge said. "Adding Newsday to the Cablevision family will combine powerful newsgathering capabilities with industry-leading electronic distribution. We believe this presents great opportunities for us to build our subscription-based businesses. This marriage of content and technology will also strengthen Newsday's role as the connecting point between readers and the events, businesses and neighbors around them. I am confident in the many talented employees at Newsday and look forward to the opportunities that lie ahead."

Knight called the deal "an important moment for us all at Newsday. We are joining a company that has a tremendous understanding of the Long Island market and a history of recognizing the value of local content. We strongly believe that Cablevision will help us further distinguish Newsday and create even greater value for our readers and advertisers."

Cablevision and Newsday will begin exploring ways to grow their advertising-based and subscription-based businesses. Cablevision is expected to begin using its cable systems across the New York area to run Newsday advertisements that highlight the strength of the paper's news, content and advertising.

The deal puts Cablevision in control of the largest block of advertising and news resources in the region. Its digital cable empire reaches more than 3 million households in the tri-state area, and it owns News 12 Networks operating a 24-hour news programming through the region. Newsday's paid weekday circulation is just under 380,000 copies.

Cablevision's bid was once considered a wild card in the high-stakes negotiations for Newsday. Tribune Co. chief executive Sam Zell reached a handshake deal with News Corp. chairman Rupert Murdoch in April to buy Newsday for $580 million. Cablevision, at least initially not in the running, quickly entered, at first through discussions with the New York Observer. But soon Cablevision was on its own with a table-turning $650 million offer the other media titans, including Daily News owner Mort Zuckerman, were unwilling to match.

The companies announced Cablevision won the bidding and reached an agreement in principle in May.

The deal received the approval of the Department of Justice and the Federal Trade Commission late in June.

Market watchers say Cablevision has two primary tasks ahead as it seeks to integrate Newsday into its cable empire, which includes a 3-million-plus subscribers in the tri-state area, a large cable programming arm and News 12 Networks.

Craig Moffett, an analyst who tracks Cablevision at Sanford C. Bernstein & Co. in Manhattan, said reducing overlap and finding joint revenue opportunities are paramount.

"Owning Newsday presents Cablevision with some unique opportunities, both on the cost side and the revenue side," he said. " Obvious cost opportunities include combining some editorial functions with their News 12 business, and combining local ad sales groups for cable and newspaper advertising. On the revenue side, there are cross promotional opportunities for subscription sales, and packaged deals to be sold to advertisers across cable and print. They can even do some interesting things with respect to classified advertising and cable video on demand," Moffett said.

Since first announcing the acquisition in May, Cablevision executives have said their aim is to restore some of Newsday's former prominence after years of cost-cutting and staff reductions under Tribune. That would appear to entail some level of investment in the paper by Cablevision.

Newspaper industry analyst John Morton said while Wall Street has shown little patience for the idea of investing in newspapers as readership and ad revenue decline, he believes Cablevision is taking the right tack by seeking to bolster Newsday.

"As competition increases, it's crucial for papers to strengthen their brands, increase their standing in communities and increase their quality. Failure to pursue those goals will only hasten newspapers' demise," Morton said. Investment "is a smart thing for Cablevision to do," he said.

Related topic galleries: News Corp., Sales, New York, Newspaper and Magazine, News 12 Networks, Rupert Murdoch, Advertising

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