New York-area Knicks and Rangers fans who have been blacked out of games this month on the Optimum cable TV network can partly blame a scandal-scarred French billionaire – and his dispute with Knicks owner James Dolan is just a tiny slice of his problems.
Telecom mogul Patrick Drahi, the CEO of Optimum’s France-based parent Altice, has been at loggerheads with Dolan, CEO of Sphere Entertainment Co., which oversees Madison Square Garden Networks, over the latter’s contract with Optimum.
While Dolan’s presence on the New York sports scene is well documented, Drahi has been embroiled in multiple scandals overseas that have put his debt-ridden empire on the brink of collapse, according to multiple media reports.
Drahi’s longtime business partner and Altice co-founder Armando Pereira faces corruption and procurement fraud charges in Portugal that have led to the suspension or dismissal of over 15 Altice employees and the blacklisting of certain vendors.
Pereira, who remains under house arrest, has denied the allegations.
Drahi has not been charged, but his close relationship with Pereira has raised concerns about Altice’s governance.
The 61-year-old entrepreneur does face scrutiny from Swiss authorities for allegedly faking a separation from his wife for tax benefits.
Additionally, Tatiana Agova-Bregou, a senior executive at Altice France, is under scrutiny for allegedly receiving a luxury Paris apartment worth $1.78 million through questionable means.
Drahi’s net worth has plunged to $7 billion after being estimated at $22 billion in 2015, according to Forbes.
The Post has sought comment from Altice and Drahi.
With billions in loans coming due, Drahi is now in damage-control mode, seeking to restructure his empire before it’s too late.
To avoid default, Altice has reportedly engaged major banks – Goldman Sachs, Lazard, BNP Paribas and Morgan Stanley – to facilitate asset sales.
This shift from acquisition to divestment represents a drastic reversal for the billionaire, who once prided himself on aggressive expansion.
“Everything is on the table… It’s all about supply and demand,” Drahi told an investor conference in London on Sept. 6.
A month later, in a meeting with employees, he claimed that “there are no structural problems” at Altice and predicted that interest rates will eventually decline, easing the company’s financial burden.
Amid Altice’s financial strain, Drahi has refused to buckle in the bare-knuckled negotiations with Dolan.
The carriage agreement between Altice’s Optimum cable system and Dolan’s regional sports network expired at the end of December. Since Jan. 1, local sports teams including the Knicks, Rangers, Devils and Islanders have been blacked out for about 1 million Optimum subscribers in the metropolitan area.
Altice is reportedly saving more than $10 million a month during the impasse. The company was projected to pay MSG $127 million in carriage fees before the contract dispute, according to a financial analyst for Guggenheim Partners, cited by Sportico.
Dolan and the Garden accused Altice of negotiating in bad faith and refusing to submit to arbitration, while Altice says the Knicks boss is using the dispute as a public relations stunt to distract from the Sphere’s own debt burden.
The two moguls have squared off before.
Drahi paid $17.7 billion to buy Cablevision from Dolan in 2015 – giving Altice a major foothold in the US market, particularly in the New York area.
The sale marked the Dolan family’s exit from the cable business founded by James Dolan’s father, Charles, who passed away last month.
But the value of the company has shrunk amid increasing pressure from streaming services and cord-cutting trends, according to Jonathan Chaplin, a telecommunications analyst at New Street Research.
“It is worth perhaps $14 billion 1738352280,” Chaplin told The Post. “It is not so clear that they overpaid though. They engaged in a fair amount of value destruction after buying the asset.”
Over the past five years, Altice USA, which owns the Optimum brand, has lost nearly 92% of its value, significantly underperforming the market and industry rivals.
On Friday, Altice USA stock traded at less than $3.
The company’s poor stock performance can be traced to its inability to retain customers as well as stiff competition from rivals such as Verizon, particularly in key markets such as New York.
Optimum has also lost market share due to the growing dominance of fixed-wireless broadband providers.
Despite management changes aimed at turning the company around, Altice USA’s heavy debt burden and ongoing operational challenges continue to erode investor confidence.
“Cablevision might still be worth $18 billion now if it had remained independent or been purchased by someone else,” Chaplin said.
