Cablevision's James Dolan Touts Broadband Profits, "Cord-Cutter" Packages

THR James Dolan - H 2015
Peter Yang

THR James Dolan - H 2015

James Dolan also discussed cord-cutter packages, the future of niche networks and EDM acts, such as Swedish House Mafia, at an investor conference.

Comcast’s recent decision to abandon its planned acquisition of Time Warner Cable amid regulators’ opposition and Charter Communications' deal to scoop up TW Cable have instead kept the pay TV industry buzzing with deal talk.

But Cablevision Systems CEO James Dolan on Tuesday at an investor conference didn't get any questions about consolidation. Instead, the company's focus on broadband and new services was in the spotlight.

Speaking at the Guggenheim TMT Symposium in New York in a session that was webcast, Dolan said that the company's broadband services outperform its pay TV services hugely in terms of profitability. "The video product itself has lost a tremendous amount of margin," he said. "Dollar-for-dollar, the data product outperforms the video product 7-to-1 at our company in terms of profit back to the company." Programming costs are "rising the quickest," but there are also other costs to the video service, the CEO said.

"Connectivity has really become our number-one product," Dolan said on Tuesday, reiterating past comments. "We recognize that the connectivity experience that we offer is going to be crucial to being able to keep the customer." That is why the company is looking at adding new services, such as Wifi, he added.

Asked about the company's so-called "cord-cutter" pay TV packages, Dolan said Cablevision didn't see enough content available in over-the-top form until CBS, HBO and others announced online video services. He said the packages were not only a way to attract younger consumers. "It is also very responsive [to subscribers] where price becomes a real issue," he said. "Our response is not that's the only product we have." Instead, he said the company's service representatives can now offer consumers more limited pay TV service for as low as about $39, allowing the company to not be seen as a price "gouging" service provider, Dolan said.

Dolan predicted that highly viewed networks with popular programs, such as Mad Men and Game of Thrones, will be just fine in the changing pay TV industry and will continue to be carried. "If you are a channel that is not highly viewed, that is extremely niche, you are going to have a hard time," he said. "You are not essential anymore."

Asked about his role as executive chairman of Madison Square Garden Co. and the company's exploration of strategic options, mainly a split into two, Dolan said there was expansion room for the venue business, while the TV networks part of the business is more stable. "Two kinds of investors" make sense for the two business, offering two pure-play firms, he said.

He also discussed electronic dance music (EDM), saying it fills an arena at good ticket prices, but the only equipment needed is a laptop and a light show. "If they could go into a venue and play the same war game together" or have people join other singles at a party or find other ways to bring people together behind a shared interest without a high talent cost, the venues can benefit, Dolan said. He said Swedish House Mafia and other electronic music groups are "indicative of needs" younger audiences have, proving that even in the digital age people want to have shared experiences.

Twitter: @georgszalai