In 1973, when most people had only a dim idea of what cable television was all about, Charles Dolan saw an industry and gained an empire.
More than three decades later, Cablevision Systems Corp. is the nation’s fifth-largest cable operator, with 3 million-plus subscribers in the New York metropolitan area, and it plans further expansion.
Cablevision’s $650 million agreement, announced Monday, to acquire control of Long Island’s Newsday newspaper in New York from Chicago-based Tribune Co., comes less than a week after it disclosed plans to buy the Sundance Channel, specializing in independent programs, for $496 million. Sundance, the brainchild of actor Robert Redford, will join the company’s AMC, IFC and WE television channels.
Cablevision, Long Island’s second-largest company in terms of sales, has struck out in different directions in the past, buying Madison Square Garden in 1994 with ITT Corp. in a 50-50 deal. In 1997, Cablevision took full ownership of the Garden.
But the cable operator has mostly held to its core broadcast entertainment business for its 35 years of operation, gaining a reputation for innovation in the cable industry. In 2004, Cablevision became the first cable operator to offer what it calls Triple Play, which provides consumers with phone, cable and Internet service at a discounted rate.
In the deal Monday, Cablevision will get 97 percent of the equity in a joint venture with Tribune Co. for Newsday Media Group, which includes Newsday, the free tabloid AM New York and other area publications. Tribune Co., the parent of the Chicago Tribune, will get $612 million in cash, 3 percent equity in the new partnership worth $20 million and $18 million in prepaid rent on major real estate it will retain.
“We see this as a wonderful fit,” Cablevision President and Chief Executive James L. Dolan said. “Adding Newsday Media Group’s superb assets to Cablevision’s portfolio presents a multitude of opportunities: to provide consumers with additional quality content on multiple platforms; expand advertising opportunities for both entities and attract a larger audience than either company could on its own.”
Cablevision is made up of three parts. The cable operation, which is about 70 percent of sales, makes up most of the company’s profits from home subscriptions. Rainbow Media Holdings, the programming arm, represents about 14 percent of revenues. And Madison Square Garden generates about 15 percent of sales.
The company, which went public in 1984, has been controlled by Charles Dolan and members of his family. Charles Dolan, Cablevision’s chairman, and his family hold about 20 percent of the company’s stock but represent about 70 percent of the voting power.
Dolan, widely considered a pioneer in the cable TV industry, started HBO in 1972 and sold it to Time Inc. before starting Cablevision. Dolan also created the first regional sports channel, called SportsChannel, in 1976.
His son, James, is also chairman of Madison Square Garden, and a number of Charles Dolan’s other children and relatives are prominent in the company.
The Dolans have tried in the past few years to take the company private, but the efforts were voted down by shareholders.
Joseph Bonner, who follows the cable television industry for Argus Research in New York, said of Cablevision: “They do better in most instances than a lot of other cable companies for a lot of reasons. … They’re centralized in New York, where there’s high income, high population density. Other cable companies have far-flung operations and lower density.”
In 1998, Cablevision bought The Wiz, a chain of consumer electronics stores, out of bankruptcy for $80 million. Analysts said they saw no synergies in the deal; the venture failed as the stores closed.
