You know how people say, “I don’t want to tell you I told you so, but I told you so”? Well, I really don’t hate to say that. And when it comes to The Wiz and its former parent company, Cablevision, I told you so.
When? Well it was almost exactly two years ago. Cablevision had released its year-end financial for 2000 showing that its cumulative losses and write-offs from its dabble in retailing had now passed $300 million, and I expressed the opinion that the cable company’s shareholders wouldn’t put up with that kind of needless performance for too much longer.
You may remember that The Wiz was in Chapter 11 and on the verge of liquidation when Cablevision snapped it up for about $100 million in early 1998. Within a year it became obvious that turning The Wiz around was going to be a tough proposition. Added to the operational woes, the industry’s two 1,000-pound retailing gorillas, Best Buy and Circuit City, were about to invade the New York market with multiple stores. Cablevision’s reaction to the losses, made without public fanfare, was to quietly write off its entire investment.
Since then, due in part to the increased competition, operating losses at The Wiz continued to grow annually. Then last August, in what now has to be seen as a last ditch effort to head off total collapse, Cablevision announced it was shutting 26 of under-performing stores, leaving it with 17 that it said were operating in the black.
Finally, on Feb. 10, just before it released figures showing 2002 as yet another losing year for The Wiz, it announced that enough was enough, and that it would sell or shut down its remaining stores. It set a June 30th deadline for the action.
It turns out Cablevision didn’t need the full 140 days to mull over the close-or-sell decision. It didn’t even need 40. Just 25 days from the announcement, Cablevision said it had sold its entire interest in The Wiz to a liquidator, GBO Electronics Acquisition, and that GBO “will assume substantially all assets, liabilities and obligations, going forward.” That’s a polite way of saying Cablevision is no longer responsible for store leases, severance pay for employees or outstanding consumer warrantee obligations.
At about the same time Cablevision resolved yet another thorny issue, one that had cost it thousands of cable subscribers who switched to home satellite. It reached an agreement to carry the YES Network, a sports cable channel that now carries most of the N.Y. Yankees baseball and New Jersey Nets basketball games. Cablevision took a pass last year as YES, which charges cable systems $2.12 per subscriber for carriage rights, insisted it be included in the a basic service at no extra cost, while Cablevision was proposing to offer it a la carte at $10 a month.
Well, YES, which had audience guarantees to advertisers, sued Cablevision, and Cablevision sued YES, and thousands of die-hard Yankees fans jumped ship for satellite. Meanwhile, the New Jersey state legislature tried to pass a law to force Cablevision to carry YES and local newspapers were enjoying a bonanza of “come on over and watch the Yankees” ads from DirecTV and Echostar.
A deal was announced in March and then scuttled days before the season opener. YES then came back to the negotiating table with a proposal that gave Cablevision instant access to its signal for 90 days, during which the two would enter binding arbitration for a longer-term deal. Cablevision agreed and their customers got the Yankees’ opener with minutes to spare.
In any case, The Wiz is about to move into that Valhalla of now departed New York retailers, joining such notables as Newmark & Lewis, Tops Appliance City, Trader Horn and Crazy Eddie — to name just some of those who once all but controlled the market’s CE roost.
Bob Gerson, TWICE editor-at-large, has covered the CE industry for more than 30 years. He is the founding editor of the publication and was its longtime editor-in-chief.