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 guardian 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 effectively documented, Drahi has been embroiled in a number of scandals abroad which have put his debt-ridden empire on the point of collapse, in response to a number of media stories.
Drahi’s longtime enterprise associate and Altice co-founder Armando Pereira faces corruption and procurement fraud fees in Portugal which have led to the suspension or dismissal of over 15 Altice workers 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 issues 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 government at Altice France, is below scrutiny for allegedly receiving a luxurious Paris residence price $1.78 million by questionable means.
Drahi’s internet price has plunged to $7 billion after being estimated at $22 billion in 2015, in response to Forbes.
The Put up has sought remark from Altice and Drahi.
With billions in loans coming due, Drahi is now in damage-control mode, searching for 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 growth.
“All the pieces is on the desk… It’s all about provide and demand,” Drahi instructed an investor convention in London on Sept. 6.
A month later, in a gathering with workers, he claimed that “there are not any structural issues” 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 in the course of the deadlock. The corporate was projected to pay MSG $127 million in carriage charges earlier than the contract dispute, in response to 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 significant 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 stress from streaming providers and cord-cutting traits, in response to Jonathan Chaplin, a telecommunications analyst at New Avenue Analysis.
“It’s price maybe $14 billion 1738352430,” Chaplin instructed The Put up. “It isn’t so clear that they overpaid although. They engaged in a good quantity of worth destruction after shopping for the asset.”
Over the previous 5 years, Altice USA, which owns the Optimum model, has misplaced practically 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 could be traced to its incapability to retain clients in addition to stiff competitors from rivals resembling Verizon, notably in key markets resembling New York.
Optimum has additionally misplaced market share because of the 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 would possibly nonetheless be price $18 billion now if it had remained impartial or been bought by another person,” Chaplin stated.