From Forbes article,
Cablevision (CVC ) is closing 26 of its 53 Nobody Beats the Wiz consumer-electronics stores in the New York City area, and the outfit said on Nov. 4 that it would unload its Bravo cable channel to NBC for $1.25 billion. But that's just the warm-up. In a few weeks, the Dolans will have a day of reckoning with the Jaws of the media world: Rupert Murdoch. And the result isn't likely to be pretty.
Murdoch's News Corp. (NWS ) and Cablevision have been partners since December, 1997, when they pooled their assets to create Rainbow Media Sports Holdings. Rainbow owns Madison Square Garden, the New York Knicks basketball and Rangers hockey teams, and, most important, regional cable-sports networks in Ohio, New England, San Francisco, and Florida. Now, just when the Dolans are at their most vulnerable, Murdoch wants to undo the deal -- and take $1 billion for his trouble.
STAND AND DELIVER. It has all the makings of an interesting negotiation. As part of that agreement, Murdoch has the right to "put" his 40% stake in Rainbow Media Sports back in the Dolans' hands by December 18, 2002. The Dolans can either buy out News Corp.'s 40% stake in the channels or initiate a public offering and allow Murdoch to get his money that way.
With cash dwindling, the Dolans aren't in any position to give Murdoch back the dough. Their recent deal passing Bravo to NBC provided Cablevision with stock in the network's parent, General Electric (GE ) and the return of some 53.2 million Cablevision shares that GE owned. What little cash pact entailed, around $250 million, went to Bravo's 20% owner, Metro-Goldwyn-Mayer MGM ).
So where will the father-son team come up with the scratch? They could give the channels outright to Murdoch. Clearly, that's what the News Corp. CEO wants. "The regional-sports networks would certainly have to be part of the mix," Murdoch said in a conference call with investors on Nov. 5. "We've already had the beginnings of talks with them. But they have other things on their mind."
ON A ROLL. It all sounds very genteel, with Murdoch allowing that his company is "hoping we can come to some friendly arrangement with an exchange of assets, which would be beneficial to both parties." But anyone who knows Murdoch has to be aware of the iron will behind those soft-spoken comments.
And Murdoch has been on a roll lately. Buttressed by a stronger-than-anticipated advertising market, News Corp. on Nov. 6 reported $162 million in net profits, more than double last year's $73 million. That has helped him put together the cash stake of more than $3 billion he'll presumably use for another run at the DirecTV satellite service.
Whatever "friendly arrangement" Murdoch is contemplating with the Dolans will be a lot friendlier to the guys on the Australian mogul's side of the table. He's likely to end up with a lot more than $1 billion worth of assets for the $850 million he put into the venture back in 1997. Why? Because of the way the deal was structured, Cablevision contributed Madison Square Garden, the Knicks, Rangers, and all those cable channels for a 60% stake
Cablevision (CVC ) is closing 26 of its 53 Nobody Beats the Wiz consumer-electronics stores in the New York City area, and the outfit said on Nov. 4 that it would unload its Bravo cable channel to NBC for $1.25 billion. But that's just the warm-up. In a few weeks, the Dolans will have a day of reckoning with the Jaws of the media world: Rupert Murdoch. And the result isn't likely to be pretty.
Murdoch's News Corp. (NWS ) and Cablevision have been partners since December, 1997, when they pooled their assets to create Rainbow Media Sports Holdings. Rainbow owns Madison Square Garden, the New York Knicks basketball and Rangers hockey teams, and, most important, regional cable-sports networks in Ohio, New England, San Francisco, and Florida. Now, just when the Dolans are at their most vulnerable, Murdoch wants to undo the deal -- and take $1 billion for his trouble.
STAND AND DELIVER. It has all the makings of an interesting negotiation. As part of that agreement, Murdoch has the right to "put" his 40% stake in Rainbow Media Sports back in the Dolans' hands by December 18, 2002. The Dolans can either buy out News Corp.'s 40% stake in the channels or initiate a public offering and allow Murdoch to get his money that way.
With cash dwindling, the Dolans aren't in any position to give Murdoch back the dough. Their recent deal passing Bravo to NBC provided Cablevision with stock in the network's parent, General Electric (GE ) and the return of some 53.2 million Cablevision shares that GE owned. What little cash pact entailed, around $250 million, went to Bravo's 20% owner, Metro-Goldwyn-Mayer MGM ).
So where will the father-son team come up with the scratch? They could give the channels outright to Murdoch. Clearly, that's what the News Corp. CEO wants. "The regional-sports networks would certainly have to be part of the mix," Murdoch said in a conference call with investors on Nov. 5. "We've already had the beginnings of talks with them. But they have other things on their mind."
ON A ROLL. It all sounds very genteel, with Murdoch allowing that his company is "hoping we can come to some friendly arrangement with an exchange of assets, which would be beneficial to both parties." But anyone who knows Murdoch has to be aware of the iron will behind those soft-spoken comments.
And Murdoch has been on a roll lately. Buttressed by a stronger-than-anticipated advertising market, News Corp. on Nov. 6 reported $162 million in net profits, more than double last year's $73 million. That has helped him put together the cash stake of more than $3 billion he'll presumably use for another run at the DirecTV satellite service.
Whatever "friendly arrangement" Murdoch is contemplating with the Dolans will be a lot friendlier to the guys on the Australian mogul's side of the table. He's likely to end up with a lot more than $1 billion worth of assets for the $850 million he put into the venture back in 1997. Why? Because of the way the deal was structured, Cablevision contributed Madison Square Garden, the Knicks, Rangers, and all those cable channels for a 60% stake
