If the Dolans, perhaps the media industry’s most hard-nosed and stubborn band of entrepreneurs, are willing to part with their most prized asset, then something about the business must have changed, and irrevocably at that.
The family’s Cablevision Systems has always been viewed as a lucrative asset that would fit well within the empires of Comcast or Time Warner Cable — a cable distributor with subscribers based within commuting distance to New York City who skew toward higher incomes and fast adoption of new technologies. The Dolans, who have controlled Cablevision since patriarch Charles Dolan helped build the predecessor to HBO in the 1960s and traded it for money to build a cable system in suburban Long Island, have always had the chance to sell this jewel at their leisure.
Their decision to hand over Cablevision to European telecommunications concern Altice for $17.7 billion likely wasn’t done on a whim, but rather with a realization of the tough times faced by media-sector independents.
The Dolans said early this morning that “ the time is right for new ownership of Cablevision and its considerable assets,” and they are likely on the mark. As couch-potatoes migrate away from the living-room TV and toward use of personal mobile screens, media companies are scrambling to find new ways to hold their gaze. To do so, many of them are looking at opportunities to combine. Audiences may be splintered among hundreds of TV and web outlets and a dizzying number of emerging video-watching behaviors, but if content distributors can gang together, so goes one line of thinking, perhaps they can still attract a decent enough number of eyeballs to maintain their standing in this fast-evolving battle for consumer attention.
Cablevision made its decision to sell just weeks after AT&T scooped up satellite-distributor DirecTV and as a massive merger between Charter Communications and Time Warner Cable remains in process of completion. Verizon, whose FIOS service has been a competitive thorn in Cablevision’s side, recently bought AOL for around $4 billion, part of a move to beef up its capabilities in mobile advertising. Comcast’s acquisition of NBCUniversal also stands as a competitive concern. It’s growing more clear that a media-business entity that serves a niche – even one as lucrative as Cablevision’s subscriber base – can only do so much.
Altice seems ready to pair Cablevision with Suddenlink, the St. Louis-based cable distributor that it purchased for $9.1 billion earlier this year. Success is not guaranteed. “The combination of Suddenlink and Cablevision is still little more than a rounding error in a scale game in which the top four players (AT&T/DirecTV, Comcast, Charter, and Dish Network) each have more than 14 million subscribers,” said Craig Moffett, an independent cable analyst, in a research note issued Thursday. Even if Altice snatched up other small U.S. operations, he said, Altice “would be a distant, distant fifth place player.”
Going it alone, however, would not make Cablevision’s place in the world a secure one, either.
Other media independents are facing challenges, albeit in different lines of business. The Weather Company, controlled by NBCUniversal, Bain Capital and Blackstone, has retrenched in recent months, cutting programs and staff at its flagship Weather Channel, as it faces pushback from distributors who want to reduce the fees they pay to carry the service, particularly as more consumers get weather information from mobile outlets. The company has been knocked about in recent years, getting into showdowns with Dish and Verizon over carriage terms.
Other content players face similar headwinds. As distributors consolidate, they stand to gain significantly more leverage over small and medium players such as Starz, Scripps Networks Interactive and even AMC Networks, a programming company also owned by the Dolans.
The Dolans long managed Cablevision aggressively, despite the changing landscape. Cablevision pursued new technologies like interactive and addressable advertising, even making gains in these area faster than some of their larger counterparts. If members of this determined family have decided they can no longer go it alone, will some of their contemporaries also start to feel the same?