Cablevision Comeback

Due to Cablevision already being in hot water with the New Yorkers for not carrying the Yankee games, Dolan decided not to reduce customer service staff. As mentioned in text, in addition to Cablevision's market value taking a nasty tumble in summer of 2002 with typical range of $60 to $70 per share to only a low of$5, the company was only losing the cable subscribers thanks to their refusal to carry New York Yankee games; Cablevision certainly wanted to carry the games, but not at the price the Yankees channel was demanding (Bovee, Thill, Mescon pg.577). Dolan did not want to lose more customers than Cablevision had already lost with the decision of not playing the games. Another reason for the decision to not reduce the customer service staff was because of the handling of the high call volumes the company was expecting due to the inquiries.

How did Cablevision's sinking stock price affect its financial management? First off, how does the stock price affect the company? In the harshest sense of the word, not much; that is, as long as the company does not run out of cash, then the company's stock price is irrelevant to the company's operations. Nevertheless, the stock price is also a reflection of what the market thinks the company's equity is worthy of which presents implications. If the stock price underrates a company's equity, it will tend to attract buyout offers, as people will take advantage of the stock's low price. In Cablevision scenario, they relied heavily on the sales of their own stock as the source of cash and as a security for loan if they needed to borrow money. When the massive tumble, as with many media and technology-related stocks in summer of 2002, took place it sent Cablevision' stock prices to an all time $5 low a share. This left Cablevision financial management scrambling for money they actively counted on from the stocks that were once worth $60 to $70 a share.

Running a few dollars short when expenses pile up faster than income is a common dilemma many college students find themselves in. Running short of $600 million is a situation Cablevision found themselves in; While losing subscribers with the sinking stock prices, Cablevision was also losing money but at the same time they needed to invest in new technologies in order to keep their existing customers and attract new subscribers.Cablevision was depending on stocks as the main source of the financial support in case they needed to borrow money. Through the years, their stocks supported borrowing. Borrowing $600 million would be rough taking into consideration the sinking stock-collateral value. Their $7 billion debt caused by acquiring business units over the years was not helping either.

"Instead, Dolan developed a multipart plan for increasing revenues and cutting costs. To both protect and grow the core cable business, which offered multiple opportunities for selling new digital