Entertainment Industry

Category: Cablevision

Cablevision plans to sell Clearview Cinemas

Cablevision Systems Corp. said it wants to exit the movie theater business.

The Bethpage, N.Y.-based cable company said it plans to sell its Clearview Cinemas circuit, which has 230 screens in 45 locations, to concentrate on its core business.DOLAN

"We think someone else could do better with that asset than we could,'' Chief Financial Officer Gregg Seibert said on a conference call with analysts Thursday. "Hopefully it will be a robust process."

The announcement came as Cablevision reported a sharp drop in earnings during the first quarter, when net income fell to $54 million compared to $104 million from the same time a year ago. Revenue was $1.7 billion, about the same as the first quarter of 2011.

The results reflected the sale of AMC Networks last year and an increase in spending to upgrade its network.

While Cablevision added more subscribers than expected -- 7,000 basic video subscribers -- shares in the company fell by more than 8% during early trading Thursday after results were reported.

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-- Richard Verrier

Photo: Cablevision Chief Executive Jim Dolan. Credit: Kathy Willens / Associated Press

Verizon TV serves up Tennis Channel (again)

Serena Williams Australian Open

Just in time for the year's first Grand Slam tournament, the Australian Open, Verizon FiOS customers now have the ability to catch even more tennis coverage -- on the Tennis Channel.

Verizon, the New York-based telephone and television company, said Tuesday that after a nearly five-month blackout, it had forged an agreement with the Santa Monica-based Tennis Channel to return the cable channel to many of Verizon's 4 million television customers. 

That allowed the Tennis Channel on Tuesday to begin popping up on Verizon's FiOS TV ultimate package as well as a separate FiOS sports package offered to subscribers in California, upstate New York, Texas, Florida and other markets. 

The independently owned Tennis Channel joined Verizon's lineup in 2005 during the early days of FiOS service.  But last  September, just as the marquee U.S. Open tournament was getting under way in New York, Verizon's carriage contract expired and the company lost its right to carry the channel. 

At that time, the Tennis Channel also was removed from Cablevision Systems, which provides cable TV service to residents in the suburbs of New York, among other regions. The Tennis Channel and Cablevision have had a particularly testy relationship as the two companies have been unable to reach an agreement that would bring the Tennis Channel to most of Cablevision's customers.

The underdog Tennis Channel, which is available in about 30 million homes, has been challenging top-seeded cable giants -- including Cablevision and Philadelphia-based Comcast Corp -- in an effort to extend its reach and generate more revenue.

Separately on Tuesday, the Tennis Channel petitioned the courts to enforce a recent FCC administrative judge's ruling that Comcast must make the channel more widely available to its customers. Comcast said it would file a response to the Tennis Channel next week. The FCC is expected to decide on that dispute in the coming months. 

Financial terms of the new multi-year Verizon FiOS TV-Tennis Channel agreement were not disclosed. 

ESPN is providing the bulk of the TV coverage of the Australian Open for the U.S. audience. The Walt Disney Co.-owned sports operation turns over a few hours a day (4 p.m. to 6 p.m. Pacific during the early rounds) to the Tennis Channel. The Tennis Channel, which pairs retired tennis greats Martina Navratilova and Tracy Austin with veteran sportscaster Bill Macatee, plans live broadcasts of the Australian Open women's doubles, men's doubles and the mixed doubles finals as well as encore presentations of the men's and women's finals, which are scheduled to air live on ESPN2.

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-- Meg James

Photo:  Tennis star Serena Williams at this year's Australian Open in Melbourne.  Credit:  Quinn Rooney / Getty Images

Analyst Greenfield blasts Cablevision and its CEO Jim Dolan

Jim Dolan is getting scrutiny from Wall Street

A top media analyst thinks Cablevision Systems Corp. Chief Executive Officer Jim Dolan has some explaining to do.

BTIG's Rich Greenfield, one of the most prominent analysts covering the media and telecommunications industry, blasted the cable operator's cloud of secrecy over the reasons behind departure of its chief operating officer Tom Rutledge, who Monday announced he was taking the president and chief executive position at Charter Communications.

In a Tuesday report, Greenfield wrote, "we believe something really bad transpired between Jim Dolan and Tom Rutledge in recent weeks."The analyst scrutinized Securities and Exchange Commission filings regarding Rutledge's deal and thinks somehow his contract -- which still had two years on it -- was  breached, which cleared the way for him to jump ship to Charter Communications, a St. Louis-based cable company with over 4 million subscribers in 25 states.

"We want to know what happened and whether Rutledge gave the company written notice last month related to a breach of his contract and whether the company knowingly failed to correct the breach, providing Rutledge “Good Reason” termination," Greenfield said.

Rutledge, 58, is one of the most well-regarded executives working in the cable industry. He's also very well compensated. Not only did Cablevision provide him with a helicopter shuttle to get to work, his 2010 pay package was worth almost $30 million.

The exit of Rutledge coupled with the November departure of John Bickham, another senior executive at Cablevision has Greenfield worried that Dolan may assume a more hands-on role. Dolan, a colorful executive who fronts a blues band on the side is also chairman of Madison Square Garden Co. and a director of AMC Networks, the cable programming company that Cablevision spunoff earlier this year. He has not always been held in high regard by Wall Street.

"We would not be comforted by Dolan taking a meaningfully larger operational role at Cablevision," Greenfield said, adding that Cablevision has "completely shielded our access to him for years."

Cablevision, which has more than three million subscribers, most in the New York City region, has not commented on any of the specifics regarding the recent departures at the company. A spokesman did not immediately respond for comment on Greenfield's report.

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-- Joe Flint

Photo: Jim Dolan. Credit: Patrick McDermott/Getty Images.

 

Cable exec Tom Rutledge lands at Charter

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Cable operator Charter Communications Inc. has tapped former Cablevision Systems Corp. Chief Operating Officer Tom Rutledge as its new president and chief executive.

Speculation that Rutledge was heading to St. Louis-based Charter had been rampant since his abrupt resignation from Cablevision late last week. At that time, neither Rutledge nor Cablevision would say why he was leaving the New York-based cable operator after almost a decade as one of its most senior executives and with more than two years left on his contract.

Rutledge, 58, will succeed Michael Lovett, who said in October that he was stepping down as president and CEO of Charter, which has 4 million subscribers in 25 states. Many of Charter's systems are concentrated in the Midwest but it also has operations in Southern California.

Cablevision, with over 3 million subscribers primarily in the New York area, has indicated it is not looking to replace Rutledge.

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-- Joe Flint

Photo: Tom Rutledge. Credit: Cablevision.

 

Cable industry's Jim Dolan wears many hats

Jim Dolan's MSG is in a fight with Time Warner Cable

Jim Dolan dons many hats.

As chief executive of cable operator Cablevision Systems Corp., part of his job is to be the tough guy. He rails against yielding channel space to networks that have tiny audiences because extra channels raise the bills for his customers.

That was the case last year when he fought unsuccessfully against carrying some low-rated cable and broadcast channels owned by News Corp. in return for getting access to the Fox network.

However, when Dolan is wearing his hat as chairman of Madison Square Garden Co., the opposite is true. His job is to get little-watched cable channels distributed.

Madison Square Garden Co., parent of popular New York-based cable sports channels MSG and MSG+ -- home to the New York Knicks and Rangers -- wants Time Warner Cable to put its low-rated music network Fuse back on its systems. 

Time Warner Cable, which has systems serving most of the city of New York, is trying to negotiate a new deal to carry the MSG channels but no longer wants Fuse, which it dropped last week.

Fuse was watched by "fewer than one-tenth of 1% of the customers who have it available," or just 4,000 of the cable company's 7.4 million subscribers that get the network, Time Warner Cable said in a statement. 

Time Warner Cable has indicated it is willing to pay more to carry the MSG networks and would accept a 6.5% increase in fees for the channels. That was rejected, Time Warner Cable said, and now Madison Square Garden is asking for a 53% bump in price to carry only the MSG networks.

"Programming costs are skyrocketing, and we work very hard to negotiate lower fee increases to keep our customers’ bills as reasonable as possible. Fifty-three percent is not reasonable in anybody’s book –- I doubt many of our customers got a 53% raise this year," said Mike Angus, Time Warner Cable's senior vice president of content acquisition.

According to SNL Kagan, an industry consulting firm, the two MSG channels cost a combined $5.00 per subscriber per month. Time Warner Cable also paid about 8 cents per month per subscriber for Fuse, a figure that one former executive at the channel said was twice as much as what other distributors pay. Time Warner Cable declined to comment on what it pays for Fuse.

The contract between Time Warner Cable and Madison Square Garden for the MSG channels is up at the end of the year. Time Warner Cable has said it won't pull the MSG channels from its systems.

"We have been attempting to negotiate a new agreement with Time Warner Cable for close to two years, and are simply asking them to pay fair and reasonable rates that are consistent with what other providers pay for our programming –- nothing more,” said Michael Bair, president of MSG Media.

“Unfortunately, Time Warner Cable is not interested in reaching a fair agreement, and, in fact, is not interested in conducting productive negotiations on behalf of its customers," added Bair.

 Dolan, who became CEO after his father and company founder Chuck Dolan stepped back, also has a third hat -- that of a blues singer. He has his own band -- JD and the Straight Shot. Unfortunately, he's not singing Time Warner Cable's tune.

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Photo: Jim Dolan. Credit: Jeff Christensen / Associated Press

Another top executive leaving Cablevision

Cablevision COO Tom Rutledge abruptly resigned

Tom Rutledge, the chief operating officer of Cablevision Systems Corp. and a well-regarded media industry executive, is leaving the company after a nine-year tenure.

Cablevision, which has about 3 million subscribers, primarily in the tri-state region of New York, New Jersey and Connecticut, did not provide any explanation for Rutledge's abrupt resignation.

Rutledge's exit comes just a few weeks after the surprise resignation of John Bickham, Cablevision's president of cable communications.

 Rutledge, 58, was known as a tough negotiator for his boss, Jim Dolan, Cablevision's president and chief executive. The two were something of an odd couple. While Dolan is a colorful and free-wheeling character who fronts a blues band and has a bit of a swagger, Rutledge is seen more as a straight-laced family man.

In a statement, Rutledge said, "Everything I hoped for when I came to Cablevision has come true." Dolan credited Rutledge with having a "rare combination of technological vision and operational excellence."

ISI analsyt Vijay Jayant called Rutledge's exit "one of the biggest bombshells in recent industry memory." Jayant downgraded the stock to hold saying the departure of Cablevision's `key man' comes at a tenuous time for the company," noting increased competition from Verizon's FiOS and a the growth of the Internet as a competitor to cable.

Cablevision said it has started a search for a replacement for Bickham but that it has an "experienced senior management team in place" to take on Rutledge's duties.

Cablevision is known for its battles with other media industry giants. It had loud fights with both News Corp.'s Fox and Walt Disney Co.'s ABC over new distribution deals for their channels. It also feuded with Viacom over its desire to stream cable programming to Apple's iPad devices.

According to Securities & Exchange filings, Rutledge's 2010 compensation was valued at $28.2 million, which was up about $18 million from 2009.

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Photo: Tom Rutledge. Credit: Cablevision.

Cablevision and Viacom make peace in iPad dispute

Cablevision Systems and Viacom Inc. were fighting over Cablevision's move to make Viacom-owned cable networks available to its subscribers via Apple's iPad

Media giants Cablevision Systems Corp. and Viacom Inc. have made peace.

The two were fighting over Cablevision Systems move to make Viacom-owned cable networks available to its subscribers via Apple's iPad. Viacom argued that its deal with Cablevision did not give it permission to offer channels such as MTV, Nickelodeon and Comedy Central on other platforms beyond cable TV.

In a joint statement, the two companies said they have resolved pending litigation in New York Federal Court and Viacom programming will remain available for Cablevision to offer via iPad and other devices.

Neither side would elaborate on what led to their new found friendship. In a statement, the companies cited as key the resolving of an "unrelated business matter."

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Photo credit: Emmanuel Dunand / AFP / Getty Images

Potential list of suitors for AMC Networks should go beyond usual suspects

MADMEN Cablevision Systems Corp. has finally spun off the bulk of its programming assets as AMC Networks and now the guessing game is starting as to who might gobble it up.

Besides the AMC channel, home to the dramas "Mad Men," "Breaking Bad," "The Walking Dead" and "The Killing," the newly public AMC Networks is also parent of WE, a network that caters to women with a heavy load of reality fare, as well as IFC and Sundance, two smaller channels that primarily offer independent movies.

AMC is the crown jewel of the bunch. Once home to old movies, it now rivals HBO in terms of critically acclaimed shows. "Mad Men" is probably second only to "The Sopranos" in the amount of ink spilled by columnists, critics and bloggers obsessing over every moment of the show.

Shares of AMC Networks have performed below the expectations of some analysts since Cablevision distributed them to its shareholders on June 30, when they closed at $43.50 in "when issued" trading. Late in Monday's trading session, the stock was going for $37.60, down 94 cents, or 2.4%, since Friday's close.  At that price, the company's market cap is almost $3 billion.

Among the usual suspects that come to mind when cable networks come on the market, Time Warner, parent of Turner Broadcasting's TBS and TNT; News Corp., home of FX, Comcast, owner of USA, Bravo and Syfy; and Disney, whose holdings include ABC Family and Disney Channel; have all been mentioned as potential suitors. Another name that will surface sooner or later is Viacom, parent of MTV, VH1, Comedy Central and Nickelodeon.

All of those companies, however, already have significant cable programming holdings and it is unclear whether AMC Networks really fits into their respective strategies.

WALKINGDEAD Disney in particular tends to steer clear of niche networks in favor of general entertainment and sports programming. News Corp. has FX and Fox News driving their cable business as well as their own sports channels. Comcast might be wary of gobbling up even more programming after enduring a lengthy and challenging review process of its purchase of NBCUniversal. Time Warner, like Disney, usually focuses on mainstream channels.

Viacom does have more niche-type networks and might see some advantages to adding AMC Networks to its portfolio. The other big cable network operators -- Discovery Communications and Scripps Interactive -- are not experienced in operating networks that do more than program reality.

One company that seldom gets mentioned as a potential buyer of AMC is CBS. A case could be made that for CBS adding a few basic cable networks would be a good move.

CBS currently has only a couple of cable properties -- pay-TV channel Showtime and CBS Sports Networks, a small sports channel that focuses primarily on college athletics. Although Showtime has done a nice job of turning itself around and becoming a player in the original programming game, it still trails HBO in terms of revenue.

Adding an established basic cable network like AMC would also give CBS more leverage with cable and satellite operators it wants to pay top dollar to carry its television stations. In addition, it would give CBS more outlets for its content. Furthermore, most of its holdings are in broadcast TV and radio -- businesses that have only one revenue stream. The dual revenue stream that cable networks have -- subscriber fees and advertising -- would also help CBS weather tough economic times.

A real long shot buyer could be Time Warner Cable. Once part of Time Warner, it was spun off because Time Warner CEO Jeff Bewkes decided being a pure play content company was the way to go. Time Warner Cable has also made moves recently indicating it too believes in the power of content. In Los Angeles, it struck a big deal to land the TV rights to the Los Angeles Lakers, which it will use to start a cable sports network.

Admittedly, it's a big jump from running some regional sports channels to operating entertainment networks, but the brass at Time Warner Cable has said it sees owning content as a way to control its own economic destiny.

Most analysts don't expect a sale of AMC Networks to happen for at least a year if not two. Don't be surprised if the usual suspects take a pass and a surprise buyer emerges.

-- Joe Flint

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Photos: Top: Don Draper (Jon Hamm) and Megan (Jessica Pare) with youngest son Gene Draper in an episode of "Mad Men." Credit: AMC. Right: Rick Grimes (Andrew Lincoln) in AMC's "The Walking Dead." Credit: AMC.

AMC Networks doesn't make killing in first day as public company

KILLING

Looks like Wall Street had a similar reaction to AMC Networks Inc.'s first day as a public company as critics did to the much-maligned season finale of AMC's murder mystery "The Killing."

AMC Networks -- parent of cable channels AMC, WE, IFC and Sundance -- closed its first day as a public company at $39.85 a share, down 8.3% from the $43.50 price that shares were issued at Friday morning.

Cable programmers are usually viewed as hot commodities by Wall Street. However, AMC Networks, which was spun off by New York-based cable operator Cablevision Systems Corp., has some red flags, according to Wall Street analysts.

For starters, unlike two other publicly traded programming companies -- Discovery Communications and Scripps Networks Interactive Inc. -- AMC Networks doesn't make or own big stakes in much of the programming that it carries on its channels. AMC's biggest shows include "Mad Men" and "Breaking Bad," both of which are from outside studios. That, wrote Barclays Capital analyst Anthony DiClemente, "places the company at a disadvantage" when negotiating carriage deals with distributors.

Furthermore, DiClemente thinks that AMC and WE, the two biggest channels of the company, are already getting too much money from distributors in license fees and that the future revenue growth will be modest.

"Based on our analysis, AMC and WE are 25% above market on their affiliate fee deals, while networks like HGTV, Food Network, Investigation Discovery and Nickelodeon are significantly below market," he said.

There is a school of thought that AMC Networks will be a takeover target. The Dolan family, which holds the majority of stock in Cablevision, also has the majority of voting shares in AMC Networks. While  family members may be looking to sell, their large stake should discount the stock price, some analysts feel. Furthermore, the Dolans are notoriously tough negotiators and can be hard to read by Wall Street.

Not everyone is down on AMC. While DiClemente has a target price of $32 per share, BTIG analyst Rich Greenfield issued a report this week with a target price of $50 for AMC Networks. BTIG anticipates several potential suitors for the programmer, including Comcast's NBCUniversal and Time Warner. Of course, those companies already own substantial cable programming holdings and may not feel a need to add four smaller networks.

As for the Dolans, Greenfield wrote that the family has been "far more investor friendly over the past couple of years than in the prior two decades." 

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-- Joe Flint

Photo: A scene from AMC's "The Killing." Credit: Chris Large / AMC.

Viacom files suit against Cablevision over iPad application

Viacom files lawsuit against Cablevision over iPad application

The battle between programmers and cable operators over streaming content on Apple's iPad and other tablet devices just got nastier.

Viacom Inc., whose holdings include cable networks MTV, Nickelodeon and Comedy Central, has filed a lawsuit against Cablevision Systems Inc. demanding that the cable operator  stop making Viacom's channels available to iPad users. The suit was filed Thursday morning in U.S. District Court for the Southern District of New York.

“We have taken this action to protect our valuable content," Viacom said in a statement.

The suit is similar to one Viacom filed earlier this year against Time Warner Cable in the same court. On Wednesday, both Time Warner Cable and Viacom told the court the two companies had entered into a standstill agreement and asked that legal proceedings be halted while the two tried to reach a deal.

The lawsuit against Cablevision, which has over 3 million subscribers primarily in New York City and Long Island, accuses the cable operator of violating its contract and says that Viacom has never granted the right to offer its programming via anything other than cable.

Whatever goodwill exists between Viacom and Time Warner Cable over the issue is non-existent with Cablevision Systems Inc. Time Warner Cable pulled Viacom's channels when the programmer raised concerns, and then the two companies exchanged suits. But Cablevision has disregarded Viacom's requests to have its channels removed from the iPad service.

"Over the last few months, we have had limited and unproductive discussions with Cablevision about licensing iPad rights," Viacom said in its statement. "We remain open to productive discussions, but we cannot wait indefinitely while our networks are being distributed without permission.”

"Cablevision's very popular Optimum App for iPad, which has been available to our customers for nearly three months, falls within our existing cable television licensing agreements with programmers – including Viacom," Cablevision said in response to the suit.

Fights between distributors such as Cablevision and programmers such as Viacom are becoming more common. Distributors want to be able to offer their services on new platforms in an effort to fight cord-cutting by consumers. Programmers want to be compensated more if their channels are going onto new platforms.

-- Joe Flint

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Photo: iPad 2. Credit: Noel Celis /AFP/Getty Images

 

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