For Cablevision, Newsday has been nothing but bad news.
The Long Island-based cable company’s foray into newspapers is proving to be an ugly one after the firm said it would write down its newspaper assets by between $375 million and $450 million.
The stunning revelation, made in a filing yesterday to the Securities and Exchange Commission, is the latest chapter in what has been a challenging situation for Cablevision, whose assets include cable systems and channels, the Knicks, the Rangers and Madison Square Garden.
Cablevision last spring acquired Newsday plus a batch of smaller papers for $650 million from Sam Zell’s now-bankrupt Tribune Co., and completed the sale last July.
Since then, however, the economy has collapsed, which is taking a toll on newspaper advertising.
Cablevision admitted as much in its filing, saying the pre-tax charges “reflect the continuing deterioration of values in the newspaper industry and the greater-than-anticipated economic downturn” that has hurt the paper’s advertising business.
In writing down the value of Newsday Media Group, Cablevision is wiping out nearly 70 percent of what it paid for newspaper assets. The company said the charges will be included in 2008 financial results, but will not result in any material future cash outlays.
Cablevision is slated to report quarterly results later this month.
Owning Newsday has come with some pain. Last month, the paper’s top editors staged a walkout that lasted nearly a week over how the paper covered a sexual-harassment suit filed against Knicks center Eddy Curry. The editors and Cablevision management ultimately patched things up.
“We continue to move forward with our plan to use Newsday with our other properties to strengthen our media portfolio and presence in the New York market,” said a Cablevision spokesman.
The impairment charge was released in conjunction with news of a new $500 million debt offering. Shares of Cablevision rose by 2 cents to end at $15.13.