This should relieve investors who feared that Madison Square Garden Executive Chairman Jim Dolan‘s decision to invest $125M in an entertainment partnership with music manager Irving Azoff would leave the sports and entertainment company strapped for cash. MSG says that it has been “approached by certain parties expressing interest in Fuse and [has] retained JP Morgan to explore all strategic alternatives” — which usually means a sale. The music channel reaches 73M pay TV homes, and distributors pay an average of 8 cents per month for each home. Fuse could sell for about $300M, Credit Suisse analyst Michael Senno figures following Al Jazeera’s agreement to pay $500M for Current TV which collected about 11 cents per sub from distributors. That would “more than offset capital used in recent investments” including the Azoff deal and a $25M investment in Brooklyn Bowl Las Vegas. Stifel analyst Benjamin Mogil also notes that Fuse could command a healthy price because its deals with distributors would enable a buyer to reprogram the network to offer “anything other than live sports.” Many MSG shareholders are eager to see the company return cash to them, possibly by repurchasing shares.
Toronto: Unstoppable Harvey Weinstein Brings Jim Dolan And John Sykes For Hurricane Sandy Concert Pic ’12.12.12′
EARLIER: After burning the midnight oil collaring the music-themed John Carney film Can A Song Save Your Life?, Harvey Weinstein will try to rebound tonight for more music when he engages in a panel discussion after tonight’s premiere of 12.12.12 with James Dolan and John Sykes (his accomplices in organizing the concert that raised $50 million for victims of Hurricane Sandy) and documentary producers Amir Bar-Lev and Meghan O’ Hara. The pic chronicles the televised concert that was pulled together very quickly and headlined Bruce Springsteen and the E Street Band, Billy Joel, Alicia Keys, Paul McCartney, Dave Grohl, Roger Waters, Eddie Vedder, Chris Martin, Michael Stipe, Adam Sandler, Eric Clapton, Jon Bon Jovi, The Rolling Stones, The Who and Kanye West. The film premieres 8 PM at the Winter Garden Theater.
The longtime music manager will be CEO of Azoff MSG Entertainment, which vows to develop “artist-friendly and, as a result, fan-friendly projects” in music, TV, and digital media. Irving Azoff will own 50% by folding in Azoff Music Management, where he’ll continue to handle clients including the Eagles, Steely Dan, Van Halen, and Christina Aguilera. Madison Square Garden will kick in $125M for its 50% and will provide as much as $50M in revolving credit loans. Outside of music management, Azoff and MSG Executive Chairman Jim Dolan see themselves largely as a source of venture capital. “We don’t know what the next big thing is going to be, but we want our phone to ring so we get a chance to help find it and nurture it,” Azoff tells me. “This was a dream we had to have a place where we could move quickly.”
The Cablevision CEO rarely grants interviews, which makes the one in this morning’s Wall Street Journal interesting. Jim Dolan continues to hint broadly, as he did in a call with analysts last week, that he’d be open to a sale. “We are going to continue to do the right things for shareholders,” he says. While he didn’t say specifically whether Cablevision was engaged in any deal talks, he noted that business is “in our blood” — and if his family didn’t have cable systems then “there would be another business.” And he seems troubled about prospects for cable’s video services. He says programmers and operators live in a “bubble” by requiring subscribers to buy channels as a bundle. As online video becomes more appealing to young viewers, the bundled channel model will mature “badly.” Indeed, he says “there could come a day” when Cablevision stops offering its own video service, allowing someone else to provide programming over the company’s broadband infrastructure. The leader of blues band JD & the Straight Shot, just off a tour opening for the Eagles, likened what’s happening in cable to the decline of the music business. Those who don’t “ride the wave” get “eaten by the wave,” he told the paper.
Cablevision shares shot up 5.8% this morning after James Dolan told analysts “you never say never” when asked whether his family might sell the cable company — seen as a potential target for Charter or Time Warner Cable. He doesn’t want to look like he’s inviting a sale. “Our plans are to continue to proceed in terms of operating the company in the best interest of the company and its shareholders.” The Cablevision CEO also seemed to back away slightly from his previous reference to Long Island’s Newsday as a core asset. “The business is somewhat in transition” he said although he adds that Cablevision believes the newspaper helps the company and “there is a potential for a very bright future for that business.” The comments follow Cablevision’s so-so Q2 earnings report this morning. The company’s net income included $107.5M from discontinued operations, led by Rocky Mountain systems it sold to Charter and the Clearview Cinema chain sold to Bow Tie Cinemas. With their contributions, net income ended up at $135.4M, +113.1%, on revenues of $1.57B, +0.8%. That’s just a hair short of the $1.58B in revenues that analysts expected. The video business underperformed: Cablevision ended the quarter with 2.87M subs, down 20,000 over the three month period. The Street expected a loss of 9,000. The company also reported that revenues from video fell …
You can’t attribute the 9.4% increase in Cablevision‘s share price today — and 23% jump over the last five days — to the day’s only solid news: Charter just closed the deal announced in February to pay $1.63B for Cablevision’s systems in Colorado, Montana, Wyoming and Utah. No, investors are more excited by new reports that the Dolan family — led by Cablevision founder Charles Dolan and his son, CEO Jim Dolan — may finally be willing to sell the company, and that Time Warner Cable as well as Charter want to kick the tires. TWC has long salivated to combine its crown jewel cable system in Manhattan with Cablevision’s franchises in New York’s outer boroughs and suburbs including Long Island. Up to now, the Dolans haven’t been interested. The family tried to take the company private in 2007, but shareholders rejected the offer. Cablevision’s stock took a roller-coaster ride as execs grappled with growing competition from phone companies led by Verizon’s FiOS and restructured operations — including spinoff deals in 2010 for Madison Square Garden, and in 2011 for AMC Networks. But Cablevision’s stock price has been virtually dormant since the beginning of 2012, at least until the latest speculation-fueled run-up. The change: Liberty Media’s John Malone recently paid $2.6B for a 27.3% stake in Charter — run by former Cablevision COO Tom Rutledge. They’re eager to snag Time Warner Cable.
The Communications Workers of America has been beefing with the cableco for more than a year, since it claimed Cablevision illegally sacked 22 staffers who elected to join the union. The two sides have been embroiled in a fight that has landed at the National Labor Relations Board, and the union fired a salvo Thursday by disrupting Cablevision’s annual shareholders confab. The Wall Street Journal reports that after repeated attempts to quiet the protesters, CEO James Dolan summoned the cops to eject them from the meeting at the cabler’s Long Island HQ. The union countered that shareholders had “asked the company tough questions about the potential impact” of the labor flap. Cablevision said later, “This is a shareholder meeting with a clear set of rules. The CWA attempted to disrupt the meeting; they were asked to refrain, and when they did not, they were asked to leave. The matter is now in the hands of the authorities.”
The stock was just up 3.6% last year, but the board says that execs did a good job despite “the continuing difficult economic and competitive environment in 2012 and the impact of Superstorm Sandy.” Jim Dolan‘s package consisted of $1.8M salary, $3.7M stock awards, $6.9M option awards, $3.7M non-equity incentives, $238,429 change in pension value, and $592,715 in other compensation, according to the proxy filed at the SEC this evening. The package was just a little bigger than the one Cablevision gave Charles Dolan, Jim’s father and the company founder. He made $16.6M, +51.1%. Jim’s compensation was just 2.1 times the median for other execs if you include Charles, which would be below the level (3 times) that makes corporate governance monitors worry that the CEO wields too much power. Cablevision shouldn’t have to worry that Jim Dolan might bolt to work somewhere else. His family controls 72.9% of Cablevision’s voting shares. Still, the board benchmarked his pay against CEOs of what it considers to be peer group companies including Comcast, DirecTV, Time Warner Cable, Viacom, CBS, CenturyLink, Dish Network, Liberty Media, Frontier Communications, Level 3 Communications, Windstream Corp, and Charter. The shareholder meeting will be held May 23 in Bethpage, NY.
CEO Jim Dolan didn’t have to look far to find the three execs he just named to top jobs reporting to him. He appointed his wife Kristin to a new position of President of Optimum Services, giving her oversight of what the company calls “the entire Optimum customer experience as well as the Optimum brand positioning.” She had been Senior EVP of product management, marketing and development. Sales EVP Bob Sullivan, who used to report to Jim Dolan, now reports to Kristin. In addition, a long time employee, Wilt Hildenbrand, was named Senior Advisor for Customer Care, Technology and Networks. He’s also a member of the board at Madison Square Garden, where Jim Dolan is Executive Chairman. The Cablevision chief named his brother-in-law Brian Sweeney to a new position: senior EVP of Strategy. He’ll also serve as Dolan’s Chief of Staff. Sweeney is a director at MSG and at AMC Networks, which the Dolan family also controls. The appointments “will help Cablevision to drive further innovation and efficiency across our product portfolio and move us closer to our vision of delivering the highest quality experience to our customers each time they use our products or services,” Dolan says.
What does Cablevision CEO Jim Dolan think about the forces that contribute to rising pay TV prices? Depends on what hat he’s wearing, based on his rocky performance on the cable company’s conference call with analysts this morning. He vigorously attacked Viacom‘s policy of pricing channels to make it uneconomical for cable and satellite companies to just pick up the ones that they want. Discussing the antitrust suit Cablevision filed against Viacom this week, he says that “forcing distributors to carry more than a dozen” little-watched channels is “an abuse of its market power and a violation of federal antitrust laws.” It “causes prices to rise and we believe it needs to be stopped.” Fair enough. But why is Cablevision filing the case now, two months after it reached a deal with Viacom? Dolan wouldn’t answer the question. “I don’t think I’m going to try the case in our fourth quarter call,” he said.
He also sidestepped questions that involved two other companies his family controls: AMC Networks — which, like Viacom, offers channels in bundles — and Madison Square Garden Company, a regional sports channel owner that he oversees as executive chairman. Cablevision recently announced that it will tack $2.98 a month on to customers’ bills to help pay for the rising …
The announcement, in a Live Nation SEC filing today, offers no explanation for the resignation that it says was tendered Friday and was “effective immediately.” But it follows the surprise year-end resignation of Irving Azoff, who was the entertainment company’s executive chairman and is close to James Dolan. (Indeed, Azoff manages the guitar-playing cable exec’s blues band, JD And The Straight Shot.) Dolan was elected last year to a three-year term on the Live Nation board that was due to expire in 2015. And in 2011, Live Nation made special accommodations to bring aboard Dolan — who’s executive director of Madison Square Garden as well as CEO of Cablevision. Live Nation freed him from any obligation to present corporate opportunities to the company “except in limited circumstances.” It also said that, with a few exceptions, he had no obligation “to refrain from competing with, investing in competitors of, or negotiating on behalf of other entities against, Live Nation.” In another quirk, Dolan was not named to any board committee.
The new sales effort puts a spotlight on Kristin Dolan, who’s Cablevision‘s senior EVP Product Management and Marketing — and also happens to be the wife of CEO Jim Dolan, and a member of the boards of Cablevision, AMC Networks, and Madison Square Garden. A long-time Cablevision employee, she formally took charge of Cablevision’s image machine last November. But analysts noted that her power at the company grew early this year as several top execs left, including COO Tom Rutledge and Marketing EVP Jonathan Hargis. (Both are now at Charter Communications.) BTIG analyst Rich Greenflield said in March that Jim Dolan decided to take control of operations because he blamed the old guard for allowing the company to lose ”both its technology and marketing edge.” Marketing is especially important for Cablevision. It faces stiff competition from Verizon FiOS in many of its systems in the tri-state area around New York. The company’s shares are down 7.7% over the last 12 months, a stark contrast to Time Warner Cable’s +43.7% and Charter’s +64.8%.
“Cablevision is witnessing one of the most dramatic and rapid management turnovers we have ever witnessed in our coverage of the media universe,” says BTIG analyst Rich Greenfield — Wall Street’s fiercest critic of the company and its strong-willed CEO Jim Dolan. Greenfield commented after the Long Island-based cable operator announced that David Klein is leaving as head of Cablevision Media Sales, to be replaced by Gregory McCastle, who was with AT&T. The move follows the exit of COO Tom Rutledge (now CEO of Charter), CFO Mike Huseby (who just became CFO of Barnes & Noble), President of Cable Operations John Bickham, CMO Jon Hargis, Corporate Engineering EVP Jim Blackley, and Consumer Operations EVP Kip Mayo. Greenflield says that Dolan is taking control of operations because he blames the old guard for allowing the company to lose ”both its technology and marketing edge.” The problem? “We simply do not have enough confidence in Jim Dolan to drive free cash flow growth in 2013 and beyond,” Greenfield says. Cablevision has lost 58.1% of its market value over the last 12 months.
Here’s today’s announcement.
UPDATE, 5:15 AM: Cablevision provided this description of Kristin Dolan’s background and her responsibilities as Senior SVP of of Product Management and Marketing following the departure of Marketing EVP John Hargis: “She is currently focused on brand identity and new product initiatives, and has been with the company for more than 20 years. This includes many years working directly in the Cablevision product group, during which she took a leadership role in the development, launch and continued development of our iO TV digital cable service. For the last three years, she has been running our Strategic Product Development Group, focused on long-range development across all of our services. She is well known and highly regarded in the industry.”
PREVIOUS, WEDNESDAY 8 PM: Marketing EVP Jonathan Hargis, who has been with the company since 2000, is the latest high level exec to bolt — and that’s sure to leave investors even more baffled than they were before about CEO Jim Dolan’s plans for Cablevision. The official word is that Hargis will resign this month “to pursue other opportunities.” But the company release didn’t name a replacement, which suggests that Jim’s wife Kristin — who’s senior executive vice president of product management and marketing, and a member of the Cablevision board– will play a bigger role. Analysts who have tried to determine how broad a mandate she has, and how Jim plans to manage things, say that they’ve yet to hear satisfying answers. Prior to Hargis’ departure, BTIG’s Rich Greenfield urged management explain
UPDATE, 3:18 PM: MSG just issued a statement saying that it has “a tentative agreement” with Time Warner Cable to carry MSG, MSG+ and Fuse “effective immediately.” The company thanked New York Gov. Andrew Cuomo, Attorney General Eric Schneiderman, and NBA Commissioner David Stern. MSG also says that it’s “committed to providing our fans with award-winning programming that continues to warrant their loyalty and allegiance, and we thank them for their patience.” Schneiderman is claiming credit for having “worked diligently with Time Warner Cable and MSG Networks over the last month to bring about a resolution to their dispute.”
PREVIOUS, 1:40 PM: We’ve confirmed that Time Warner Cable will have MSG on for tonight’s game. The No. 2 operator also has agreed to keep carrying Fuse, MSG’s low-rated music channel. MSG would have lost $10M a year in revenue if Time Warner Cable had dropped the channel. But Mike Angus, Time Warner Cable’s SVP Content Acquisition, said in December that fewer than one-tenth of Fuse’s potential viewers tuned in — making MSG’s effort to package it with its popular sports networks “nothing more than a tax on New York sports fans.”
PREVIOUS, 12:54 PM: New York basketball fans, and owners of Madison Square Garden stock, can rejoice. The 48-day contract dispute that kept regional sports channel MSG off of Time Warner Cable is over — with final terms expected before the New York Knicks’ game tonight with …
This is one heck of a week for the Dolan family. It isn’t just because of Lin-sanity — the mind-boggling scoring spree by New York Knicks point guard Jeremy Lin that has sent the stock price soaring for Madison Square Garden, where Jim Dolan is chairman and the dominant shareholder. AMC Networks, the cable networks company that the Dolans also control — and that went public last June — hit a new high today, closing at $44.26, up 3.1%. Investors are chewing on the possibility that it will go on a scoring spree of its own, potentially making it a ripe acquisition target. On Sunday the channel’s Season 2 premiere for The Walking Dead attracted 8.1M viewers, the largest audience ever for a cable drama. And on March 25 it will have the eagerly anticipated return of its hit series Mad Men. That led J.P. Morgan analyst Monica DiCenso this week to raise her target price for AMC shares to $51 from $43. At today’s closing price, AMC shares are up about 17.8% so far in 2012. AMC will report its year-end earnings March 15.
The fear for a lot of investors is that Madison Square Garden Chairman Jim Dolan has too many agendas that will lead him to avoid compromising with Time Warner Cable in their dispute over payments for channels including regional sports powers MSG and MSG+. Madison Square Garden shares fell 1.4% today — a contrast to the overall market which was up about 1.6% — after Dolan yanked the services from Time Warner Cable on New Year’s Day when their carriage contract expired. The companies remain far apart on terms, and don’t even have plans to resume negotiations. That’s a big risk for MSG: Time Warner Cable accounts for about 2.5M MSG subscribers, about a third of its total. The $112M that the cable company pays annually for the channels amounts to about half of Madison Square Garden’s estimated cash flow for its current fiscal year. But execs close to both companies say that Dolan is determined to show that he’s no pushover. The part time blues guitarist knows he’d probably have to kiss MSG’s music channel Fuse goodbye if he allows Time Warner Cable to drop it — something the pay TV company says it wants to do because so few people watch it. Dolan’s main job as CEO of Cablevision gives him an additional incentive to show his moxie. Time Warner Cable has long pined to
You can have your pick of rumors this morning about why COO Tom Rutledge suddenly decided to leave — and what it means for Cablevision’s future. Maybe he had a falling out with Charles and Jim Dolan, who control the No. 7 cable operator (including Verizon and AT&T in the pack). Maybe Rutledge got a better offer to run Charter. Maybe the Dolans decided to try again to take Cablevision private — or to sell the company, logically to Time Warner Cable considering how many adjoining systems the companies have in the New York area. But since nobody really knows, investors are left to fear that the departure of one of the industry’s most respected operators means there’s trouble ahead: Cablevision shares opened down 13%. If that holds, then it would shave about $506M from the company’s market value and take the stock to its lowest point in more than two years. Miller Tabak analyst David Joyce lowered his stock recommendation to “hold” from “buy” — and lowered his short-term price target to $15 from $22 –saying that the news “puts a question mark over
This is a big, big deal for Cablevision. Tom Rutledge is considered one of the best operators in the cable business — a level-headed guy and fierce competitor who’s equally comfortable handling questions about technology, finance, and marketing. Bernstein Research analyst Craig Moffett recently called Rutledge “arguably the most valuable executive in the cable industry.” That matters because investors also consider Rutledge to be a firewall protecting them from the craziness that always seems to surround Cablevision’s owners, the families of Charlies and Jim Dolan. The Dolans can’t afford to let investors wonder whether Cablevision’s going back to the days when it was paralyzed by family infighting and disastrous deals like the one Charles pushed to back the Voom collection of HD channels. Rutledge also is leaving just as some analysts wonder whether Cablevision’s best days are behind it: The stock price is down nearly 59% this year as video subscriptions have fallen. “Before 2011, Cablevision had historically posted revenue and EBITDA [cash flow] growth in-line or better than its publicly traded peers,” Moffett says. “Not anymore. Now, Cablevision looks like the sick man of the cable industry.”
Here’s the company’s statement:
BETHPAGE, NY– Cablevision Systems Corp. (NYSE: CVC) today announced that Tom Rutledge, chief operating officer, has informed the company that he will resign.
Mr. Rutledge joined Cablevision in 2002 as the company’s president of cable and communications. He became chief operating officer in 2004, assuming additional responsibilities for Cablevision’s Rainbow