We have long ago ceased to be able to fathom the management workings of the Cablevision group, owned as it is by the tightly knit Dolan family, and the purchase this week of the New York based Newsday Media Group for $650 million is no exception, outbidding such notables as News Corp on the way.
The company said that the Newsday combination of print and online and advertising assets presents it will unique opportunities, but from here we can’t see what they are.
Right now Cablevision is in the cross hairs of a rejuvenated Verizon, selling its FiOS IPTV service in almost 80% of the Cablevision footprint, eating up many of the cable company’s triple play opportunities. We might have expected it to either get out of the cable business and consolidate itself around local assets, such as its multiple sports group and Madison Square Garden assets, or for it to go the other way, and try to shift its emphasis from triple play services, to quadruple play, by acquiring wireless assets. Instead it chooses to buy a newspaper which is part of New York, and especially Long Island history.
Cablevision acquired 97% of Newsday Media Group, at a value of $632 million, plus $18 million as prepaid rent to the previous parent, Tribune. At least the business is cash generative and growing.
Newsday is a daily newspaper serving Long Island and New York City with a circulation of around 335,000. It also has the Star Community Publishing Group of shopping and of lifestyle magazines which takes its circulation into the millions. So locally is has an exceptional brand.
Cablevision CEO James Dolan said, ‘Both Cablevision and Newsday are in the content, customer relationship and advertising business and we see this as a wonderful fit.’ Sorry, but this looks like a dynastic acquisition related to the local community, and not a business fit at all.
However Dolan said, or implied that Newsday would go out to Cablevision households online, and give its 2.3 million high-speed Internet subscribers new interactive and homepage opportunities. Newsday will also be used to promote Cablevision’s live sports and entertainment assets so there will be some cross marketing.
In a completely unrelated move, and one much more in line with protecting its existing business Cablevision this week also announce a $300 million investment in wi-fi rather than WiMAX or cellular, which is perhaps where it needs to be.
This Cablevision wi-fi approach sounds almost retro, given the recent disappointment in wireless mesh as the basis for metrozone networks to challenge incumbent telcos and potentially provide a partner network for cablecos. It plans to erect a wi-fi canopy over its entire footprint, as a wireless overlay to its hybrid fiber coax network, a project that will take two years to complete. It will then offer free wireless access to its own data subscribers, an approach already adopted in assorted variations by some DSL operators, like AT&T, and even cellcos, like T-Mobile.
However, these bundles of free wireless with broadband or mobile services have mainly relied on a network of hotspots, which may be variable in coverage, while by building the wi-fi itself, Cablevision is guaranteeing access throughout its territory ‘ though of course, this will not provide the benefits of mobile roaming outside the zone for traveling subscribers, unless it signs roaming deals with a major wi-fi operator like T-Mobile USA.
Here there is much more logic to its thinking, because almost half of Cablevision’s TV customers are already broadband internet subscribers and half of these users already have wi-fi in their homes. With free wider area wi-fi access available, Cablevision kills the danger that these customers buy a mobile broadband package from Verizon (or AT&T).
Cablevision estimates a cost of $70 per home passed to support 1.5Mbps internet and voice. However, it will also have to cope with the quality of service issues that are inherent to wi-fi because of its unlicensed spectrum, however well planned and controlled its mesh is.
For vendors, this will be a welcome revival of interest in carrier class wi-fi mesh, and likely suppliers could be Motorola, already well established among cablecos through its set-top boxes; Cisco, which has the Cable ServiceMesh platform; or a start-up such as BelAir, which created a cable technology advisory committee in 2006 to develop wireless networks optimized for integration with hybrid fiber coax networks.