Cablevision drama unfolds at confab
NEW YORK — The combustible drama at Cablevision continued unabated Wednesday as one of the company’s top execs did little to douse speculation that the cabler may make a midnight run for Adelphia, or that maverick founder Charles Dolan could betray his own company and bolt for the satcasting biz.
Cablevision chief operating officer Tom Rutledge tried to conduct his presentation at a Banc of America Securities confab in Gotham as if nothing were amiss but quickly found himself having to deflect questions about Adelphia and the furious family battle between Chuck Dolan and his son, Cablevision CEO James Dolan, over the satcasting service Voom.
Today is the deadline for Chuck Dolan to present his plan for buying Voom’s assets to the Cablevision board. Earlier this week, Dolan filed papers with the Federal Communications Commission saying the new company he’s formed to run Voom is in the process of securing financial backing totaling $400 million.
Rutledge was fuzzy when asked whether the Cablevision board may give Chuck Dolan more time.
That’s not the only deadline. New York’s Metropolitan Transportation Authority is expected to decide today whether to accept the New York Jets’ proposal to build a nearly $2 billion football stadium on the West Side of Manhattan — or a counterproposal for the land use and air rights pushed by Jimmy Dolan and Cablevision.
At the Banc of America gathering, one investor asked Rutledge if it would really be feasible for Chuck Dolan to remain chair of the Cablevision board at the same time that he runs a satcaster venture, considering that satcasting is the archenemy of cable.
“No, I can’t speak to that,” Rutledge said.
Fulcrum Global Media analyst Richard Greenfield said the whole scene at Cablevision is surreal. He and other analysts were incredulous to learn that Chuck Dolan is asking the FCC to stop Cablevision from selling the Voom satellite to EchoStar, allowing him to keep all of the Voom assets.
“How could you be a competitor to yourself? How do you file against your own company?” Greenfield said.
While Rutledge said he couldn’t comment specifically on Adelphia, he went on to say that Cablevision would indeed be interested in the right acquisition.
“We’ve shown in the past that you can take cable assets and generate rapid revenue,” Rutledge said.
But analysts say they find it hard to believe that Cablevision would actually team up with private equity firms Kohlberg Kravis Roberts & Co. and Providence Equity Partners and make a play for bankrupt Adelphia.
Favored buyers are Time Warner Cable and Comcast, which have submitted a joint bid for Adelphia estimated to top out at $17.6 billion-$18 billion. The current bid by Providence and Kohlberg is estimated to be worth about $15 billion, although that bid would go up if Cablevision joined.
Greenfield and other analysts said Cablevision’s sudden interest in Adelphia didn’t make sense, considering Cablevision decided several years ago to focus on its New York markets; Adelphia runs scattered systems around the country.
“I think it’s a combination of Chuck looking for a way to fund Voom and Jimmy looking to hang on,” Greenfield said.
What about Malone?
Greenfield also questioned John Malone’s role in the possible Adelphia bid.
After the Cablevision board sided with Jimmy Dolan and voted to sell the Voom assets earlier this year, Chuck Dolan booted three board members and replaced them with his own picks, including Malone.
Speaking before Rutledge at the Banc of America confab was Time Warner Cable chief Glenn Britt, who emphasized that the conglom’s cable biz doesn’t need to grow — it’s already large enough to realize necessary economies of scale.
“But the real thing is, we like the business. If we can buy more cable at a price that makes sense, we think we should do it. If it doesn’t make sense, we shouldn’t do it,” Britt said when asked about Adelphia.
Britt also noted that ultimately separating the cable group into a stand-alone company makes sense because parent Time Warner “likes the mix of businesses it’s in. We don’t want to completely change the mix of assets in Time Warner and become a giant cable company.” A separate entity would allow for expansion in cable, “keeping the same mix.”
In the West Side stadium fight, Jimmy Dolan is convinced that the project would cut into the profits of Cablevision’s Madison Square Garden by drawing major performers and even some sporting events away from the Garden, which is only a few blocks away from the site. Cablevision’s proposal tosses out the idea for a stadium, instead calling for construction of 5,800 apartments, a five-acre park, a hotel with 750 rooms, restaurants, office buildings, an elementary school and a library.
The Jets’ bid is favored since the stadium is the linchpin of New York’s bid to serve as host city of the 2012 Olympics, and the National Football League said it would award the 2010 Super Bowl to Gotham if the stadium gets built.
Wall Streeters say Cablevision’s entry into the stadium fight further reflects the cabler’s fractured attention.
Cablevision shares were up 80¢ to close at $28.15 in trading Wednesday, a gain of 2.93%.
(John Dempsey contributed to this report.)