By Albert Samaha
By Steve Weinstein
By Devon Maloney
By Tessa Stuart
By Alison Flowers
By Albert Samaha
By Jesse Jarnow
By Eric Tsetsi
In addition to the expiration of its New York contract, Time Warner was also facing another major change last year: launching a $9.5 billion spin-off of its cable interests to its wholly owned subsidiary, Time Warner Cable. The contract with Time Warner provides that the franchise cannot be transferred "without the prior written consent of the city." Time Warner never sought such consent, even though the spin-off was completed in February and proposed in 2008. So the city is allowing Time Warner to retain the contract in its name even though it's out of the cable business. Bruce Regal, the city attorney on the cable deal, calls this "a unique circumstance," adding that Time Warner "continues to be ultimately bound by these franchise obligations regardless of the spin-off." The pretense that Time Warner is running a cable system it sold, and that Time Warner Cable isn't running the system it owns, has the ring of favorable treatment about it.
Comptroller and mayoral candidate Bill Thompson says that the delays do as well. He has written two letters to the Public Service Commission, one before he squared off against Bloomberg, contending that Time Warner is deliberately delaying a deal and accusing the city of "not aggressively" moving to stop it. As a member of a committee that reviews city franchises (and is dominated by mayoral appointments), he was able to impose new consumer protections in a contract for another cable carrier last year. The delays have allowed Time Warner Cable to avoid the imposition of the same protections. If a third extension is granted this month, as Regal anticipates, whatever deal the city cuts is likely to occur after the November election. Thompson told the PSC that he's "extremely troubled" by these delays. Besides dragging its feet, the city also filed no objection when Time Warner successfully petitioned the Federal Communication Commission last year to end city regulation of its customer rates. Thompson's office also found this "troubling," though Regal said any objection would have been "futile."
Beyond Time Warner and Bloomberg TV, there's one other party affected by the switch: the YES Network, which is partially owned by the Yankees.
The Yankees, of course, may owe more to Bloomberg and Doctoroff than any other company in New York. Not only did the city dump public money into the new stadium, but the administration has been accused of illegally adjusting land appraisals to justify additional public bonds for it.
Did the Yankees or YES do Bloomberg a favor with the channel switch?
Yankees and YES officials say they did not like moving up the dial. Time Warner spokeswoman Harriet Novet says the company had "made that change together with the YES Network" under the terms of its "contractual agreement." A former Time Warner executive confirmed that, by contract, YES would have to be consulted before it could be moved away from the Mets channel, SNY (in something known as a "proximity clause").
Ray Hopkins, YES's chief operating officer, says that his network "didn't realize who was coming in" until after the cable company informed him that the switch was being made. But after repeatedly being asked if YES had the right to refuse the move, he declined to answer until finally saying, "Going down this path is dangerous for me" because of confidentiality rules associated with the contract.
Howard Rubenstein, the powerful publicist who represents Bloomberg LP, YES, and the Yankees, says, "The Yankees had no idea about the switch until the matter was concluded."
"It was handled strictly by YES," he adds, but he would not address YES's acquiescence to the change other than to say that "YES didn't want to pay for lower channel placement," which suggests that it had the option of staying on channel 30 at a higher fee.
A Bloomberg LP spokeswoman says the company requested the switch and paid Time Warner for it, but she declined to provide any details or offer examples of elsewhere in the country where it had achieved a similar change in its dial position.
Everything Mike Bloomberg does—his three campaigns, his hundreds of millions a year in charity, even his public career—springs from his global company, Bloomberg LP, which has been called the Google of financial data. It does $6.2 billion of business a year and usually earns a 30 percent profit. He owns a hoggish 85 to 92 percent of it (depending on whom you believe).
Bloomberg planned his first mayoral campaign from his corporate offices. He began thinking about running as early as 1997, and eventually assigned the management of this uncertain enterprise to three of his aides at Bloomberg LP who would all eventually become deputy mayors: Patti Harris, Kevin Sheekey, and, to a lesser degree, Ed Skyler. This synergy was infectious: The company created a news division to cover the city at the same time that its owner started actively planning his first race.
Bloomberg's three executive assistants—Allison Jaffin, Irene Pistorino, and Karen Greene—came with him to city government from the company and the campaign. All of them now receive both a full-time public and part-time private salary in an unusual arrangement approved by city ethics officials, working for him on personal and corporate matters for up to 30 hours a week.