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Analysts question whether Dolan's a good fit for Newsday

BY MARK HARRINGTON AND THOMAS MAIER | mark.harrington@newsday.com; thomas.maier@newsday.com

9:51 PM EDT, May 1, 2008

What is Charles Dolan up to?

As the 81-year-old chairman of $6.5 billion Cablevision Systems Corp. joined the bidding for Newsday yesterday, observers from Wall Street to the world of journalism say his vision might come down to three key ambitions: more news content, advertising gains and a tighter lock on the Long Island market.

The Bethpage-based company, which reported a 2007 profit of $218.4 million, may well be looking to the cross-media successes of one of its bidding rivals, Rupert Murdoch and his News Corp., to model its own ambitions for Newsday. News Corp., which purportedly has bid $580 million for Newsday, owns Fox News, The Wall Street Journal, the New York Post and two local broadcast TV stations.

Experts say that, whether such ambition can be realized by Dolan with a $650 million bid for Newsday is up for debate -- and, thus far, Wall Street seems to have its doubts.

On a day of solid stock market gains, Cablevision shares lost 45 cents and changed hands at more than double the normal level in advance of the bid. Company spokesman Charles Schueler declined to comment.

One person who has spoken with Dolan about his plans for Newsday described the vision as decidedly TV-centric -- which may be why the New York Observer newspaper is not a partner in the bid. Earlier reports said the Observer and Cablevision might jointly bid for Newsday.

The TV-centric vision would involve a plan for the cable giant's News12 operation to share content from Newsday's print and Internet operations, and also to sell advertising among the company's properties. Cablevision sells ad spots on all the cable channels it carries, in addition to News12.

One former Newsday executive, who asked not to be identified, said he believed the Cablevision bid "makes a great deal of sense."

"If you are Dolan and you own the only real competition to Newsday on Long Island, why not own Newsday?" the former executive said. "It really locks up Long Island," for Cablevision, particularly as Verizon is expanding its FiOS fiber optic TV network here with the reported ambition of launching its own local news program.

Newsday may well be worth the premium investment for Dolan, said media analyst and investor Porter Bibb.

"It's not what you pay, but what you can do with a property," he said, noting the addition of Newsday print and online advertising to Cablevision's existing cable, broadcast and online offerings would give it a much stronger presence in Long Island's advertising market.

Louis Ureneck, chairman of the journalism department at Boston University, said bringing Newsday reporting into the mix at Cablevision's news channel certainly will add appeal, but he added, "The question is how do they monetize the strategy? Is there enough here to justify the kind of price they're offering?"

Wall Street doesn't appear to think so.

"The company needs to stick to its core business and not go out on entrepreneurial pursuits that are far away from its core expertise," said Richard Greenfield, an analyst at Pali Research in Manhattan.

David Joyce, who tracks Cablevision for Miller Taback & Co. in Manhattan, said he thinks Newsday is better-matched to Murdoch and his News Corp.

"Murdoch knows newspapers," Joyce said. "The Dolan family does not."