Cablevision's prospective owner talks tough on bloated salaries

Cablevision's prospective owner talks tough on bloated salaries

By Malathi Nayak

NEW YORK (Reuters) – If you earn more than $300,000 at cable operator Cablevision Systems Corp , watch out – your new boss-in-waiting has his eye on you.

Patrick Drahi, whose European telecoms group Altice has just sealed a deal to buy Cablevision, on Thursday signaled that huge changes were coming at the cable company long controlled by the Irish-American Dolan family.

Speaking at a Goldman Sachs conference in New York, Drahi said more than 300 employees at Cablevision earn over $300,000 a year.

"This we will change," the French-Israeli billionaire added.

Drahi, a serial acquirer in the past 22 months, is known for sending in a team of executives after each acquisition to cut costs on everything from software to staff, often sparking rows with suppliers & employees.

Cablevision, which serves the affluent suburbs of New York City, spends $49 a month in operating expenses per customer, compared to $14 a month at Altice's French cable operator Numericable, Altice said in a slide presentation.

At Suddenlink, a smaller St Louis-based cable provider that Altice bought earlier this year, the equivalent monthly cost is $32 & Drahi aims to cut it to $25.

"We believe there is a significant rationalization opportunity there on the cost side," Altice Chief Executive Dexter Goei said on a conference call, pointing to steps like simplifying billing, making truck outings more efficient & modernizing its network.

Overall, Altice is aiming for $900 million in annual cost cuts at Cablevision, a target analysts called ambitious.

"These cost savings imply a nearly 47 percent margin profile, superior to any U.S. cable operator, even those with materially higher scale & more benign competitive environments," analysts at Jefferies said in a research note.

While Drahi may have a free hand cutting fat when it comes to managers at Cablevision, he may face a tougher ride with its rank & file workers, some of whom have been in a long-running fight with the Dolans over their right to form a union.

In France a mediator was appointed to arbitrate between Numericable-SFR & its suppliers after the operator demanded a 20-40 percent cut in prices on contracts.

(Reporting by Malathi Nayak; Additional reporting by Leila Abboud & Peter Henderson; Writing by Christian Plumb; Editing by Tiffany Wu)

Source: “Reuters”