Leo's back. Almost. Former AT&T Broadband president Leo J. Hindery Jr. — the architect behind cable's consolidation trend — is in negotiations to become chairman, CEO and an investor in a new regional cable-sports network that will hold the TV rights for YankeeNets, a sports-team holding company formed in 1999.
Hindery declined comment. But sources close to the situation said that Hindery is within weeks of signing a deal to head up "Newco" — the would-be pay TV home of Major League Baseball's New York Yankees and the National Basketball Association's New Jersey Nets.
Games from the National Hockey League New Jersey Devils, also owned by YankeeNets, won't become available until 2007.
YankeeNets has been seeking to raise about $200 million by selling a one-third interest in the potential New York City-area network for months. According to sources, likely investors include Goldman Sachs & Co. and Quadrangle Group Inc., a New York investment boutique with ties to the media industry.
Officials at Goldman and Quadrangle declined comment.
Hiring Hindery would appear to squeeze out Harvey Schiller, the former Turner Sports executive who was brought in as chairman of YankeeNets in February 2000. But sources close to the situation said that Schiller, 61, would remain with YankeeNets, but never intended to run the network.
"I don't think Harvey, at this stage of his life, wants to be a day-to-day guy," said one source close to YankeeNets. "He will have an overall role."
If Hindery is appointed — and there is still a possibility that negotiations could break down — one of cable's most respected and popular figures would return to the industry after a two-year hiatus.
Hindery would step in at a crucial time for YankeeNets. Formed in 1999, YankeeNets severed its ties this year with Madison Square Garden Network — the regional sports network owned by Cablevision Systems Corp. — after its 10-year contract with the programmer expired.
MSG didn't go down without a fight, initiating a series of court battles that culminated in YankeeNets agreeing to a $52 million deal with MSG for the 2001 season.
In June, YankeeNets exercised its right to buy back 85 games for the 2002 season from MSG for $30 million, cementing its plans to start its own sports network. YankeeNets already had the rights to the remaining regular-season games.
Hindery has little time to start the network and negotiate carriage deals with MSOs in the New York metropolitan region, including Cablevision, Time Warner Cable and Comcast Corp. The new network would need to have deals in place by March at the latest, spring training for MLB teams. Time Warner refused to comment and none of the MSOs had returned calls by press time.
Sources close to the situation have said that although Hindery hasn't been hired yet, it is likely that he has already made at least some initial contact with executives at the MSOs, most of whom have been longtime friends.
"You shouldn't think that [Leo] hasn't talked to them [MSOs]," said one source close to the matter. "He knows the industry and it [the sports programming] is a good product. You just have to do it in a way that's respectful that the prices are fair to the value being offered."
But despite his success and reputation in the industry, Hindery would be on the other side of the negotiating table should he land the sports-network job. While heading a network would be different than running an MSO, Hindery has experience with both.
"I was on the board with him at United Video Satellite Group, which was a programming distributor," said Bresnan Communications Inc. president Bill Bresnan. "He's got a pretty well-rounded knowledge of the industry.
"He just has tremendous energy and a tremendous amount of enthusiasm. He understands finance and he can get the troops going. He'd make a good choice."
Insight Communications Co. Inc. chief financial officer Kim Kelly also believed that Hindery would have no problem in operating a regional cable network.
"I don't think it [managing a network] is a real different skill set," Kelly said. "He's a terrific negotiator and manager of people. I would not be surprised to see him do this."
Hindery also could help smooth negotiations with operators at a time when MSOs are bristling at the high price of regional sports networks.
YankeeNets' decision to go ahead with its own channel leaves a big void for MSGN, which will lose arguably its biggest ratings and advertising draw in Yankees baseball.
Although some have speculated that MSGN could work out a deal to air at least some Yankees contests, sources close to YankeeNets said that is not a consideration. MSG officials declined to comment.
A bootstrap millionaire who got started in the mining industry after graduating from Stanford University Business School, Hindery built his first cable company, InterMedia Partners, into a top MSO before Tele-Communications Inc. chairman John Malone brought him in to run that company in December 1997.
His task was to transform TCI from a sprawling behemoth with outdated plant and serious customer-service problems into a tightly clustered, attractive takeover target.
Hindery made a major impact, swiftly firing about two-dozen senior TCI executives in order to build his own team.
He swung dozens of system sales, swaps, buys and joint ventures that reshaped the industry by creating large regional clusters with the needed scale to support new services.
Hindery was often cited as being responsible for making TCI an attractive acquisition target — it was purchased by AT&T Corp. in March 1999 for about $48 billion — but chafed under the bureaucratic culture of his new bosses. He resigned as president of the cable unit, then called AT&T Broadband & Internet Services, in October 1999.
After leaving AT&T, Hindery became CEO of GlobalCenter Inc., the Web-hosting arm of telecommunications service provider Global Crossing Ltd. Three months later, he became CEO of Global Crossing, but resigned from that post in October 2000 after just seven months.
Since then, Hindery has been devoting time to HL Capital, a company he formed to manage his investments.
Ever since leaving Global Crossing, Hindery had appeared to sour on the cable industry, as evidenced by recent speeches in which he said he would not return to cable unless he could recreate the experience he had at TCI.
Something evidently has changed his mind.
According to sources, Hindery has known the participants in YankeeNets for years and was contacted by that group shortly after it severed its deal with MSGN. Those sources also noted that Hindery has strong ties to the Northeast — he has had an apartment in New York for several years, and his daughter began attending Princeton University in New Jersey last year. His wife is originally from the East Coast.
Hindery, who already spends one day a week in New York, is expected to move to the area while retaining his house in California.