Audio Video News

Bowing to criticism from investors, Cablevision Systems Corporation announced August 8 that it would cut its capital expenditures by nearly half. The cable giant plans to reduce its staff by approximately 7%, sell its Clearview Cinema theater chain, and close 26 THE WIZ electronics stores. There are 59 Clearview theaters in the New York metropolitan area; most THE WIZ stores are also concentrated there.

Cablevision is the seventh-largest cable provider in the US, with three million subscribers in the New York area, but has taken a battering in the stock market, as have most companies in that industry. It was recently downgraded by Moody's Investors Service, Inc. to "Ba-3," or three levels below investment grade. The company's stock closed down 16% on Thursday, August 8, at $6.60/share, after reporting a net loss of $98.2 million for the second quarter. Subscriber growth has been below expectations, according to Cablevision executives.

In addition to workforce reductions, Cablevision's executives will see their salaries frozen at current levels for the next two years, and won't receive cash bonuses. "Cablevision, like most companies today, must prove it can produce a dependable growing return for money it has already spent before it can expect to receive additional investment," chairman Charles Dolan said of the cost-cutting measures. Debt incurred from system upgrades—broadband, video-on-demand, and digital television—is weighing heavily on the entire industry. Cablevision's cutbacks should give it enough capital to last the year without further financing. The plan includes offering Cablevision customers set-top converter boxes from manufacturers other than Sony, with whom Cablevision previously had an exclusive relationship.

Financially troubled Vivendi Universal SA is considering the sale of its US-based videogame/software business, Vivendi Universal Games, Inc., a unit of Vivendi Universal Publishing. The sale could bring Vivendi as much as €2 billion ($1.96 billion), according to the Wall Street Journal. The French conglomerate has also publicly discussed unloading other US-based enterprises, including Universal theme parks, Universal Pictures, and Universal Music. New chief executive Jean-Rene Fourtou hasn't made a formal decision about such matters, but he has stated that he is against selling Vivendi's 44% share of French telecommunications firm Cegetel SA. Fourtou has already announced plans to spin off the bulk of Vivendi's Canal Plus group, a move that could net €5 billion ($4.9 billion). Vivendi has a debt load of €19 billion ($18.62 billion) according to the financial press.

Monster profits: Pixar Animation Studios, maker of the popular Toy Story films, has reported an 18% increase in profits for the second quarter, on the strength of the hit film Monsters, Inc. The Emeryville, CA–based digital animation studio reported net income of $10.4 million, up from $8.8 million for the same period a year earlier. The studio's revenue was $22.8 million, a 37% rise from the $16.7 million reported in Q2 2001. Released last November, Monsters, Inc. has grossed $523 million to date. Pixar splits box-office revenue with distributors and Walt Disney Company, its partner in several successful films.

Disney itself is in the doldrums, with a review—and possible downgrade—in process by Moody's Investors Service. Wall Street has expressed concern about the media conglomerate's $13.1 billion debt, faltering theme parks, and ABC television network. Disney's stock is also off, and there have been rumors this summer about CEO Michael Eisner having reached the limits of his tenure.

Family values: Disney's "independent" Miramax Films unit has entered a marketing alliance with brewer Adolph Coors Company. Coors products will get plenty of visibility in new Miramax films—the deal bans competing brands from appearing—and the brewer will be the official sponsor of Miramax movie premieres in the US. The Coors logo will be a striking element in the background at all such events, where the company's beverages, presumably, will also be served. Whether Miramax artists and executives might be persuaded to sport the Coors logo wasn't clear from the announcement. Coors may leverage its relationship with the studio by promoting contests to earn walk-on parts in Miramax movies—the deal gives Coors 15 non-speaking walk-on parts over the course of three years to use however it wishes—and by buying the studio's DVD releases in bulk to give away as promotional items. Ads for Miramax films, in return, may appear on Coors packaging.

The joint-marketing deal is part of an industry-wide pattern in which studios are linking up with all sorts of companies to defray the costs of marketing new films. The Motion Picture Association of America (MPAA) claims that, in the past four years, the cost of marketing independent films has risen 72%, to an average of $9.5 million per film. The Miramax-Coors marriage is an appropriate one because many of the studio's films have scenes that "take place in bars and restaurants," according to Lori Sale, executive vice president of promotions for Miramax. The partners say they will be vigilant about appearing to pitch alcoholic beverages to an underage audience. Coors is already the official beer of the National Football League.