Cablevision Systems Corp.’s $600-million unsolicited bid to buy a key land parcel on Manhattan’s West Side — potentially thwarting a plan for the New York Jets to build a domed football stadium on the site — is reminiscent of at least one aggressive move the company has made in the cable business.
The proposal, which came in a Feb. 4 letter from Cablevision and Madison Square Garden vice chairman Hank Ratner to Metropolitan Transportation Authority chairman Peter Kalikow, who controls the land, raised some eyebrows on Wall Street. Ratner said Cablevision wants to build a “mixed-use community centered on residential development (including affordable housing).”
Some observers have described Cablevision’s move as a head fake designed to delay construction of a stadium that threatens to drain revenue from the company’s Madison Square Garden unit. After all, “mixed-use real-estate development is outside the company’s expertise, and the financing for this venture remains unclear,” Merrill Lynch analyst Jessica Reif Cohen wrote in a research note last week.
Cablevision has spent millions of dollars in an advertising and public-relations campaign against the stadium plans.
The Bethpage, N.Y.-based MSO offered few details for the proposal in the Ratner letter, but the strategy appears to be having an impact on the National Football League team’s plans for the stadium, which New York Mayor Michael Bloomberg has supported because it would help New York’s bid to host the 2012 Summer Olympics.
Cablevision’s bid tops the Jets offer for the stadium site by about $250 million. The MTA’s Kalikow responded to the bid last week by asking the Jets to enter a “nonbinding arbitration process to determine the fair-market value” of the property. He also asked MSG executives to submit details for their vague plans for the site by close of business last Friday (Feb. 11).
Cablevision has built a reputation in cable of playing hardball, especially on the cable-programming side of the business.
After Brian Bedol said he refused to sell Cablevision an equity stake in the former Classic Sports Network, Cablevision sparked uproar at the National Show convention in March 1997, unveiling plans to launch a network called American Sports Classics. Cablevision even hired Muhammad Ali to greet convention attendees at its booth, around the corner from Classic Sports Network’s exhibit.
The network never launched. Cablevision backed down after Bedol sold Classic Sports to ESPN later in 1997. Cablevision eventually agreed to carry the renamed ESPN Classic.