NEW YORK (Reuters) - If you earn more than $300,000 at cable operator Cablevision Systems Corp CVC.N, watch out - your new boss-in-waiting has his eye on you.
Patrick Drahi, whose European telecoms group Altice ATCA.AS has just sealed a deal to buy Cablevision, on Thursday signaled that big changes were coming at the cable company long controlled by the Irish-American Dolan family.
Speaking at a Goldman Sachs conference in New York, Drahi said more than 300 employees at Cablevision earn over $300,000 a year.
“This we will change,” the French-Israeli billionaire added.
Drahi, a serial acquirer in the past 22 months, is known for sending in a team of executives after each acquisition to cut costs on everything from software to staff, often sparking rows with suppliers and employees.
Cablevision, which serves the affluent suburbs of New York City, spends $49 a month in operating expenses per customer, compared to $14 a month at Altice’s French cable operator Numericable, Altice said in a slide presentation.
At Suddenlink, a smaller St Louis-based cable provider that Altice bought earlier this year, the equivalent monthly cost is $32 and Drahi aims to cut it to $25.
“We believe there is a significant rationalization opportunity there on the cost side,” Altice Chief Executive Dexter Goei said on a conference call, pointing to steps like simplifying billing, making truck outings more efficient and modernizing its network.
Overall, Altice is aiming for $900 million in annual cost cuts at Cablevision, a target analysts called ambitious.
“These cost savings imply a nearly 47 percent margin profile, superior to any U.S. cable operator, even those with materially higher scale and more benign competitive environments,” analysts at Jefferies said in a research note.
While Drahi may have a free hand cutting fat when it comes to managers at Cablevision, he may face a tougher ride with its rank and file workers, some of whom engaged in a long-running fight with the Dolans over their right to form a union.
The three-year standoff ended in February with a two-year contract deal that was ratified shortly thereafter.
In France, Drahi’s tough tactics led to the appointment of a mediator to arbitrate between Numericable-SFR and its suppliers after the operator demanded a 20-40 percent cut in prices on contracts.
Reporting by Malathi Nayak; Additional reporting by Leila Abboud and Peter Henderson; Writing by Christian Plumb; Editing by Tiffany Wu