I'm wondering when locals with money to burn will realize that acquiring metropolitan daily newspapers is about as sensible as paying up for a buggy whip. Included in that foolhardy group, of course, is Sam Zell, the Chicago real estate developer who recently found it irresistible to put together a group to acquire Tribune, owner of several major newspapers, television stations, and the Chicago Cubs baseball team. Tribune has already filed for bankruptcy protection.

And then there's Cablevision (NYSE:CVC), the New York metropolitan area's cable operator and programmer, which chose to buy Long Island-based Newsday in July for $650 million. Wasting no time in downgrading the asset, however, Cablevision has already chopped $402.4 million from the carrying value of the paper.

Without the writedown, Cablevision reported a reasonably solid quarter. Revenues improved by 11% to $2.05 billion, while adjusted operating cash flow slipped by just 1% to $604.7 million. On the same basis, Cablevision earned $6.6 million, or two pennies a share.

At least directionally, Cablevision held its own with Comcast (NASDAQ:CMCSA) and Time Warner Cable (NYSE:TWC), the two largest cable operators. That feat is impressive in that, with its heavily metropolitan location, Cablevision is especially susceptible to incursions from Verizon (NYSE:VZ) and AT&T (NYSE:T), the two telephone giants that are attempting to market their own video, telephone, and high-speed data triple plays. And you can also add in DirecTV (NYSE:DTV), the satellite video provider, as a thorn in Cablevision's side.

It's also noteworthy that:

  • Cablevision's Madison Square Garden group managed to shed 86% in operating income year over year,
  • Newsday's revenues reached $107.1 million, but with the writedown, its operating loss came to $407.6 million,
  • The cable TV, Internet, and phone businesses collectively turned in a 7% revenue increase and a 10% boost to operating earnings,
  • While the count of basic video subscribers slipped by 14,900, the company added 208,500 video customers. At the same time, Internet subscribers increased by 173,200, and phone subscribers grew by 286,600.

It seems that Cablevision enjoys a major strength while also being saddled with an offsetting weakness. Its franchise locations, which run from Connecticut through much of Metropolitan New York and into New Jersey, give it demographics to die for. At the same time, the managing Dolan family is capable of strange stunts like buying Newsday. In view of that contradiction, I wouldn't rush to build a position in the company's stock amid our current topsy-turvy market. 

CVC has been accorded only one star by Motley Fool CAPS players. Would you rate it more highly?

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Fool contributor David Lee Smith doesn't own shares in any of the companies mentioned above. He does, however, welcome your questions or comments. The Fool has a disclosure policy.