How Cablevision Is Destroying Newsday

Shafqat Islam is the CEO of NewsCred, a company that helps Web publishers with their online content strategies. Having compared numerous analytics—from sources like Nielsen Media, Compete.com and Quantcast.com—Islam estimates that Newsday lost between 600,000 and 700,000 unique visitors between October and December of 2009, i.e., pre- and post-pay wall. For Islam, that’s a dubious approach.

“Their model is definitely different, I’ll give you that,” Islam tells the Press. “But my major, major problem is that I think their longer-term strategy is inexplicable.” Islam points to a line in Smith’s memo to staff, wherein Smith says that a major part of Newsday’s Web strategy is “to provide Cablevision’s high-speed Internet customers with reasons to remain with Cablevision, reasons to return to Cablevision, or reasons to choose Cablevision.”

And this is what Islam finds to be inexplicable: “[Newsday] is using their digital channel to try and increase subscriptions to their legacy business, rather than looking forward and thinking, ‘How can we really invest and innovate on our digital side?’ Other publishers are at least trying to focus on digital, whereas [Smith] has made comments that make me think their focus is, ‘How can we use digital to increase subscriptions in our paper product?’”

Buttry echoes Islam’s view: “Newspapers are in a fight for survival, and my belief is that the fight demands bold and aggressive innovation. And a newspaper company that is looking for solutions in pay walls is fighting a defensive, protective battle that, at best, will prop up the print edition—or in Newsday’s case, the print and cable business—but certainly does not find solutions in the digital world where clearly the growth opportunities lie. And if I were working for a newspaper company that was planning a pay wall, I would be trying to get out of there as quickly as I could. Because I think that those are going to be the companies that fall the farthest behind in terms of pursuing the real digital opportunities.”

Through pay walls, contractual disputes and clashes with editorial staff, are CEO James Dolan and Cablevision tearing apart Long Island’s only daily newspaper?

Rosen calls the move “cynical,” and Cablevision “would-be monopolists.” As he puts it, “[Cablevision doesn’t] care about journalistic excellence, from what I can see, so it’s not like they’re building a strong editorial culture. They’re just trying to create these monopolies and make it impossible to live on Long Island without doing business with Cablevision.”

Behind a pay wall or not, Newsday insiders tell the Press Cablevision is once again planning a redesign of the paper’s website—and in yet another apparent slap in the face to employees who are fighting pay cuts attributed to Newsday’s poor financial shape, the company is not involving Newsday’s own, salaried, interactive art team in the process. Snapshots of the site-in-progress are currently being passed around to Newsday insiders, who are making suggestions on their likes and dislikes, with the company planning to eventually outsource the job—just like it did with the last redesign.

SHELL GAME

While Cablevision squeezes Newsday’s staff for more givebacks blamed on the newspaper’s poor fiscal performance—which accounted for roughly 4 percent of Cablevision’s revenue stream last year—the nation’s fifth-largest cable TV operator, overall, is reaping massive profits, according to its latest 10-K report, released earlier this week. Cablevision saw net revenues of $7.8 billion last year, up from $7.2 billion at the end of 2008. And it’s this constant separation of Newsday from the financial successes of its parent company—and hefty bonuses of its top executives—at the negotiating table that most troubles union reps and employees.

“It’s insane,” one longtime Newsday employee told the Press when interviewed prior to the Jan. 24 vote. “The rich get richer at the expense of the people who make them rich.”

An analysis of Cablevision’s financials by the Press shows several interesting charges. Among $27.2 million in depreciation and amortization charges, which in laypersons’ terms is the devaluation of an asset over time, is a $4 million depreciation expense for the decreased remaining useful lives of two presses that were phased out in mid-year 2009, $3.3 million related to a printing press “taken out of service in December 2008,” and a $2 million impairment charge relating to Newsday’s trademark. Restructuring expenses (one-time charges) account for $6.5 million, which includes $3.6 million in severance and related costs associated with the elimination of 98 staff positions and $3.2 million related to a lease modification termination penalty and other lease and contract exit costs regarding the closure of the Alicia Patterson Building. Administrative expenses for 2009 include severance costs of $1.4 million “related to terminations within senior management,” another non-reoccurring charge.

Erase just a few of these charges, says one former veteran Newsday employee who also reviewed the financial data, and the paper is in the black.

“Why would they choose at this time to do all these write offs that would put them in a negative financial status at this time?” he asks. Some of Newsday’s presses, he adds, are more than 30 years old and “collecting dust,” with some being parted out to keep the others running.

Besides depreciating presses, though, another explanation being given by top management for Newsday’s decaying financial stability, says one Newsday reporter who asked not to be identified, is Long Island’s changing demographics, from White to a more diverse population of Hispanic, Black and Asian. According to the reporter, Jimenez made the bizarre reasoning during a slide show presentation to employees prior to the Jan. 24 vote. Some reporters were offended at the suggestion of the claim.