Cable channel deal in the works
Time Warner reaches accord in principle with Rainbow Media to keep American Movie Classics on air for 11M subscribers
BY HARRY BERKOWITZ
STAFF WRITER
August 10, 2005
Time Warner Cable has reached an agreement in principle to keep providing American Movie Classics to its 11 million subscribers despite a court ruling that it could drop the channel because AMC had added many newer films.
Josh Sapan, chief executive of Rainbow Media, a unit of Cablevision Systems Corp. that owns AMC, disclosed the possible settlement Tuesday during an earnings conference call with analysts but would not reveal details.
He said that Rainbow was still "working with Time Warner to finalize and document that agreement" and that Cablevision had cut reported second-quarter revenue by an undisclosed amount to reflect the proposed settlement.
One person familiar with the talks said that the negotiators have discussed a one-time payment of millions of dollars to Time Warner Cable from AMC. That might be a better outcome for Cablevision than if Time Warner Cable were able to sharply cut the monthly fee it pays to carry AMC. Other cable companies might seek to copy the attempt to reduce the fee, which is estimated at 24 cents per month per subscriber.
Separately, Cablevision chief executive James Dolan told analysts during the call that the company is "studying" the Farley Post Office Building in Manhattan, where a developer had proposed moving Madison Square Garden.
The developer, Vornado Realty Trust, along with Related Cos., was chosen by the Empire State Development Corp. to transform Farley into the new Penn Station. Vornado had proposed moving the Garden into part of the facility as one of four options for the site. But Empire State Development selected another option.
Dolan did not elaborate on his remarks, which were the first indication that Garden owner Cablevision was looking at the possibility of such a move. He did say that currently the Garden is proceeding with a $300-million renovation at its current site across Eighth Avenue from the post office.
A spokesman for the Empire State Development Corp. has said it chose a Vornado-related plan that includes hotel, retail and office space partly because the other proposals did not have as much "credibility," especially since it was not clear how Cablevision viewed the idea. If the Garden were to move, Vornado, which controls property around the current site, could help redevelop it, benefitting Cablevision among others. Vornado chief executive Steven Roth declined to comment.
Both the Garden proposal and the tentative settlement of the AMC court fight could be key developments helping shape Cablevision's future.
Analysts had feared that the ruling last month by Justice Bernard Fried of State Supreme Court in Manhattan -- that AMC had violated its contract with Time Warner Cable by running newer films -- could cloud the financial prospects for Rainbow if Time Warner Cable dropped the channel or if it were able to sharply cut the fees it pays Rainbow.
That possibility had cast a shadow on the $7.9 billion offer by Cablevision's controlling shareholders, the Dolan family, to take the company's telecommunications operations private and spin off Rainbow and Madison Square Garden to shareholders.
A Time Warner Cable spokesman, saying negotiators had not reached a final settlement, declined comment.
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Time Warner reaches accord in principle with Rainbow Media to keep American Movie Classics on air for 11M subscribers
BY HARRY BERKOWITZ
STAFF WRITER
August 10, 2005
Time Warner Cable has reached an agreement in principle to keep providing American Movie Classics to its 11 million subscribers despite a court ruling that it could drop the channel because AMC had added many newer films.
Josh Sapan, chief executive of Rainbow Media, a unit of Cablevision Systems Corp. that owns AMC, disclosed the possible settlement Tuesday during an earnings conference call with analysts but would not reveal details.
He said that Rainbow was still "working with Time Warner to finalize and document that agreement" and that Cablevision had cut reported second-quarter revenue by an undisclosed amount to reflect the proposed settlement.
One person familiar with the talks said that the negotiators have discussed a one-time payment of millions of dollars to Time Warner Cable from AMC. That might be a better outcome for Cablevision than if Time Warner Cable were able to sharply cut the monthly fee it pays to carry AMC. Other cable companies might seek to copy the attempt to reduce the fee, which is estimated at 24 cents per month per subscriber.
Separately, Cablevision chief executive James Dolan told analysts during the call that the company is "studying" the Farley Post Office Building in Manhattan, where a developer had proposed moving Madison Square Garden.
The developer, Vornado Realty Trust, along with Related Cos., was chosen by the Empire State Development Corp. to transform Farley into the new Penn Station. Vornado had proposed moving the Garden into part of the facility as one of four options for the site. But Empire State Development selected another option.
Dolan did not elaborate on his remarks, which were the first indication that Garden owner Cablevision was looking at the possibility of such a move. He did say that currently the Garden is proceeding with a $300-million renovation at its current site across Eighth Avenue from the post office.
A spokesman for the Empire State Development Corp. has said it chose a Vornado-related plan that includes hotel, retail and office space partly because the other proposals did not have as much "credibility," especially since it was not clear how Cablevision viewed the idea. If the Garden were to move, Vornado, which controls property around the current site, could help redevelop it, benefitting Cablevision among others. Vornado chief executive Steven Roth declined to comment.
Both the Garden proposal and the tentative settlement of the AMC court fight could be key developments helping shape Cablevision's future.
Analysts had feared that the ruling last month by Justice Bernard Fried of State Supreme Court in Manhattan -- that AMC had violated its contract with Time Warner Cable by running newer films -- could cloud the financial prospects for Rainbow if Time Warner Cable dropped the channel or if it were able to sharply cut the fees it pays Rainbow.
That possibility had cast a shadow on the $7.9 billion offer by Cablevision's controlling shareholders, the Dolan family, to take the company's telecommunications operations private and spin off Rainbow and Madison Square Garden to shareholders.
A Time Warner Cable spokesman, saying negotiators had not reached a final settlement, declined comment.
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