Following Rupert Murdoch's withdrawal from the Newsday Media Group auction,
The New York Times reported Sunday that Wall Street was baffled as to why Cablevision System Corp.'s founding Dolan family would want to buy a newspaper. While the Times couldn't find an analyst who could offer a rationale for the deal, The Deal's senior writer Richard Morgan was able to drum up a few.
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In Morgan's May 2 column, he pointed out that patriarch Charles Dolan has wanted to own Newsday ever since he launched News 12 Long Island back in 1984. In fact the inspiration for News 12 was a one-hour news magazine that Cablevision and Newsday produced in the early 1980s.
The combination of News 12 and Newsday makes sense not just for TV and print purposes, but also for the Internet. With Internet speeds making online video a reality, News 12 could offer Newsday's online operation video content not available from rival papers. Additionally, Newsday offers a boon of content to tap on TV, something News 12 may need to fend off newcomer NBC New York, NBC Universal's nascent attempt to offer a regional cable news station that piggybacks off of local affiliate WNBC's news operations.
As for the Times, maybe the paper couldn't find a rationale for the deal so it could argue that the Dolans are buying anything they can find in order to avoid paying shareholders a dividend. Even if that's the Dolan plan, at the least, they've purchased assets -- Newsday and Sundance -- that benefit Cablevision's core businesses of selling TV and Internet services and, if run correctly, could ultimately be a boon to the company.
Of course, shareholders just better hope the Dolans run the merged News 12-Newsday operations better than they run the Knicks. - Matthew Wurtzel
See story about Newsday purchase from TheDeal.com
See story about the deal's rationale from Dealscape
See story from The New York Times
See story about Sundance purchase from TheDeal.com
See Dealwatch: Cablevision Systems
See Dealwatch: Tribune
