Cablevision's Newsday Acquisition: Dolans Paid A Steep 10X Multiple; Sundance and IFC Integrate
This story was written by Rafat Ali.
Three months into completely owning Newsday, Cablevision (NYSE: CVC) has come out with some more numbers about the newspaper's financial situation last year and first half of this year, in an SEC filing late Friday, also picked up by Rich Greenfield. Newsday was bought in July for about $650 million.
-- Last year's revenues were $499 million, a 7.6 percent from 2006, which followed a 6 percent decline in 2007 over 2006. EBITDA of $65 million was a 1 percent decline year over year.
-- These declines are accelerating this year: H108 revenues of $226 million are down 11 percent from the previous year, while EBITDA dropped from $35 million in H107 to $4.5 million EBITDA in H108.
-- For $650 million purchase price, CVC paid a 10x multiple based on 2007 EBITDA ($65 million) and an estimated 12.7x Pali Capital's 2008 EBITDA forecast of $51 million.
Despite some supposed cross-platform sales opportunities, Greenfield continues to think this was a bad acquisition: "While there may be some synergies/back office savings from Cablevision's ownership of Newsday vs. Tribune's, given CVC's existing Long Island footprint, there is simply no way CVC can justify the acquisition of Newsday. The good news for CVC investors is that the Dolans have done a complete 180 and no longer appear focused on 'growth and growth strategies' aka. "acquisitions."
Meanwhile, Cablevision-owned Rainbow Media has made some more branded integration IFC and Sundance Channel...it bought Sundance earlier this year. It has combined the digital departments of two channels, reports Variety. Among its digital changes: Dan Shulman has been hired as VP of digital sales, licensing and business development for IFC.com and Sundance.com. Kevin Cirrito will oversee pricing, planning management and operations as sales VP for the digital offshoots. As for brand positioning, IFC will focus on edgier programming for young men, which Sundance will skew toward the adult 25-54 demo, with more foreign and environmentally themed programming.
By Rafat Ali