New York-area Knicks and Rangers followers who’ve been blacked out of video games this month on the Optimum cable TV community can partly blame a scandal-scarred French billionaire – and his dispute with Knicks proprietor James Dolan is only a tiny slice of his issues.
Telecom mogul Patrick Drahi, the CEO of Optimum’s France-based father or mother Altice, has been at loggerheads with Dolan, CEO of Sphere Leisure Co., which oversees Madison Sq. Backyard Networks, over the latter’s contract with Optimum.
Whereas Dolan’s presence on the New York sports activities scene is nicely documented, Drahi has been embroiled in a number of scandals abroad which have put his debt-ridden empire on the point of collapse, in line with a number of media experiences.
Drahi’s longtime enterprise companion and Altice co-founder Armando Pereira faces corruption and procurement fraud expenses in Portugal which have led to the suspension or dismissal of over 15 Altice staff and the blacklisting of sure distributors.
Pereira, who stays below home arrest, has denied the allegations.
Drahi has not been charged, however his shut relationship with Pereira has raised considerations about Altice’s governance.
The 61-year-old entrepreneur does face scrutiny from Swiss authorities for allegedly faking a separation from his spouse for tax advantages.
Moreover, Tatiana Agova-Bregou, a senior govt at Altice France, is below scrutiny for allegedly receiving a luxurious Paris residence value $1.78 million by way of questionable means.
Drahi’s web value has plunged to $7 billion after being estimated at $22 billion in 2015, in line with Forbes.
The Publish has sought remark from Altice and Drahi.
With billions in loans coming due, Drahi is now in damage-control mode, in search of to restructure his empire earlier than it’s too late.
To keep away from default, Altice has reportedly engaged main banks – Goldman Sachs, Lazard, BNP Paribas and Morgan Stanley – to facilitate asset gross sales.
This shift from acquisition to divestment represents a drastic reversal for the billionaire, who as soon as prided himself on aggressive enlargement.
“Everything is on the table… It’s all about supply and demand,” Drahi advised an investor convention in London on Sept. 6.
A month later, in a gathering with staff, he claimed that “there are no structural problems” at Altice and predicted that rates of interest will ultimately decline, easing the corporate’s monetary burden.
Amid Altice’s monetary pressure, Drahi has refused to buckle within the bare-knuckled negotiations with Dolan.
The carriage settlement between Altice’s Optimum cable system and Dolan’s regional sports activities community expired on the finish of December. Since Jan. 1, native sports activities groups together with the Knicks, Rangers, Devils and Islanders have been blacked out for about 1 million Optimum subscribers within the metropolitan space.
Altice is reportedly saving greater than $10 million a month throughout the deadlock. The corporate was projected to pay MSG $127 million in carriage charges earlier than the contract dispute, in line with a monetary analyst for Guggenheim Companions, cited by Sportico.
Dolan and the Backyard accused Altice of negotiating in unhealthy religion and refusing to undergo arbitration, whereas Altice says the Knicks boss is utilizing the dispute as a public relations stunt to distract from the Sphere’s personal debt burden.
The 2 moguls have squared off earlier than.
Drahi paid $17.7 billion to purchase Cablevision from Dolan in 2015 – giving Altice a serious foothold within the US market, notably within the New York space.
The sale marked the Dolan household’s exit from the cable enterprise based by James Dolan’s father, Charles, who handed away final month.
However the worth of the corporate has shrunk amid growing strain from streaming companies and cord-cutting tendencies, in line with Jonathan Chaplin, a telecommunications analyst at New Road Analysis.
“It is worth perhaps $14 billion 1738355404,” Chaplin advised The Publish. “It is not so clear that they overpaid though. They engaged in a fair amount of value destruction after buying the asset.”
Over the previous 5 years, Altice USA, which owns the Optimum model, has misplaced almost 92% of its worth, considerably underperforming the market and trade rivals.
On Friday, Altice USA inventory traded at lower than $3.
The corporate’s poor inventory efficiency will be traced to its lack of ability to retain prospects in addition to stiff competitors from rivals similar to Verizon, notably in key markets similar to New York.
Optimum has additionally misplaced market share as a result of rising dominance of fixed-wireless broadband suppliers.
Regardless of administration modifications aimed toward turning the corporate round, Altice USA’s heavy debt burden and ongoing operational challenges proceed to erode investor confidence.
“Cablevision might still be worth $18 billion now if it had remained independent or been purchased by someone else,” Chaplin mentioned.
