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
LONG ISLAND NEWSDAY STAFF WRITER
August 10, 2005
http://www.newsday.com/business/ny-bzamc0810,0,7964035.story?coll=ny-top-headlines
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.
================================
George Antunes, Political Science Dept
University of Houston; Houston, TX 77204
Voice: 713-743-3923 Fax: 713-743-3927
antunes at uh dot edu
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