Newsday deal unlikely to start telecom trend

Cable TV player Cablevision Systems announced today that it is acquiring Newsday for $650 million. For those outside Long Island and New York City, Newsday is that most archaic of information delivery mechanisms--a newspaper.

Back in the day, people used to read newspapers and businesses used to advertise in them. Not much of either is happening anymore. Now, people read newspaper websites, but newspapers were late to the game, and people also get information from a variety of other places on the Web. Still, despite some success on the Web, one of the other problems with newspapers is that they remain in the newspaper business, that is to say the print-on-paper business, which makes one wonder why a cable TV company would want to buy a newspaper.

According to a story in the Wall Street Journal (yes, a newspaper, and one of the few successful ones), Cablevision sees the opportunity for self-promotion and cross-selling to major advertisers. There also may be a localization angle, with Cablevision looking to strengthen its position across all the information mediums in its markets as a defense mechanism against rising competition from telcos. Perhaps, in doing so, Cablevision could even increase local newspaper circulation.

Could we see other cable TV companies do the same? And what about telcos as they gain a stronger foothold in the TV sector--could they acquire newspapers or similar companies to strengthen their positions, and their promotion and cross-selling opportunities?

How ironic it would be if this dying medium could serve as a significant point of leverage amid the new communications and information revolution. How further ironic, and bitterly so, it would be for many people in the business if one of the main purposes of the medium would have it serve as a promotional vehicle for its corporate owner.

The newspaper business model is a damaged one, and newspapers may no longer have the local touch that Cablevision believes they have. For telcos that already are dealing with their own dying medium, the landline voice business, newspapers would be a very unlikely and risky area of investment.

For more:
- read this story in the Wall Street Journal

- Dan