By Landon Thomas Jr.

January 6, 2002 | 7:00 p.m

This past Sunday, Dec. 30, was yet another gruesome night at

Madison Square Garden. The New York Knicks, Cablevision's supposed jewel, blew another one-in epic fashion. Playing the Magic, and up by 10 with three minutes–plus to go, Allan Houston and Latrell Sprewell watched stone-faced as the closing seconds dribbled through the floorboards. Spike Lee shook his head at the horror of it all. Howard Stern, Chris Rock and Robert Wuhl, sitting next to him, seemed perplexed. Throughout the sold-out Garden, boos rang out. Somewhere out there, a stomach may have been churning, and it may have belonged to Jim Dolan, president and chief executive of Cablevision and chairman of Madison Square Garden. Mr. Dolan wasn't present Sunday night-his family's four courtside seats underneath the Knicks basket were empty. Wherever he was, though, it was his difficulty: Former Garden chairman Marc Lustgarten had passed away, longtime president Dave Checketts had been cashiered. Madison Square Garden and the Knicks were now Jimmy Dolan's production. And the Knicks could well be in danger of missing the playoffs for the first time in 10 years. The foundation of Cablevision's empire-constructed painstakingly by Jimmy Dolan's father Chuck over 30 years-has been its ring of three million wealthy cable subscribers surrounding Manhattan in Long Island, northern New Jersey, Fairfield County in Connecticut, Westchester County, Brooklyn and the Bronx. While Jimmy was weaned on the hard-asset side of the business-starting out in the early 1970's as a gofer in a Chicago Cablevision warehouse-there's no mistaking the fact that since becoming chief executive in 1995, Mr. Dolan has become more closely identified with the flashy Cablevision software: the Knicks, the Rangers, the Radio City Music Hall and its programmer, Rainbow Media Holdings-home of Bravo, American Movie Classics and the Independent Film Channel. Indeed, on Wall Street these days, the buzz is growing among traders and bankers that the Dolans might finally cash in their cable assets and restructure as a media and entertainment company, the Knicks notwithstanding. The signs are numerous. On Dec. 27, the company announced that it would lay off 600 employees and take a $55 million restructuring charge against fourth-quarter earnings. "It is always very difficult to reduce staff; however, it is also imperative that Cablevision position itself to achieve maximum operational results," said Mr. Dolan. He declined to comment for this story, but for a family-run company like Cablevision-four Dolans sit on the company's board, including Mr. Dolan's brothers, Patrick and Thomas-such a market-appeasing move came as something of a surprise. Like all other media companies, Cablevision was feeling the recession's bite, and its stock-at 47 and change-was way off its high of $91. But the Dolans have always been known for keeping the concerns of the Street at a far remove. Unlike its peers at AOL Time Warner, Cablevision has never been a company to throw sweet growth promises to investors. For years, it has borrowed and spent billions on building up its cable systems and acquiring its entertainment assets. Profits and dividends, as with all cable companies, have been nil, and during Mr. Dolan's reign as C.E.O., the stock has increased more than sevenfold. Those that didn't like it-well, they could go elsewhere. There was also a nicely choreographed Jim Dolan interview in the Dec. 3 Barron's . "Is the family so in love with the business that they wouldn't consider an offer to sell? In fact we would," Mr. Dolan said. The piece was peppered with flattering comments from longtime Cablevision bulls like Merrill Lynch analyst Jessica Reif Cohen and one of its largest shareholders, Mario Gabelli of Gabelli Asset Management. All of this occurred against the backdrop of AOL Time Warner's losing to Comcast in its bid for AT&T's 16 million cable subscribers. For years, speculation has been rife that Chuck Dolan's endgame was to build up a suburban cable empire and then sell it for a princely fee to Time Warner, the cable giant of greater Manhattan. While bankers say that C.E.O.-to-be Dick Parsons aggressively bid for Comcast, a Time Warner–AT&T fusion would've had to clear major regulatory hurdles in Washington. Could it be that Mr. Parsons, with his deep Washington connections, stuck his finger in the regulatory winds and chose to pass on AT&T? Could he be preparing to lock in New York by bidding for Cable- vision's three million subscribers? Whatever the case, the market has punched Cablevision's stock up from a low of $33 in early November to today's $47. "I think the Dolans are trying to send a message to Wall Street that they are finally serious," said one media banker familiar with the company. "The cable systems have reached a level of maturity, while Rainbow is growing. What smart guys do is sell the stuff that is mature and keep the stuff that is growing." And if there is one thing that Jim Dolan is desperate to prove, it's that he is a smart guy. It hasn't been easy; past attempts to portray the family relationship have backfired. For example, in Newsday in 1997, Chuck Dolan was asked what he did when he came into conflict with his son the C.E.O. "I let him run up and down the room until he gets tired," Mr. Dolan said. "See, it's just like it was when I was 5 years old," Jimmy Dolan responded. Mr. Dolan  the Younger has also worked hard to counter the image of himself as a somewhat callow scion by charging into a number of deals. In early 1998, he bought electronics retailer Nobody Beats the Wiz (renamed the Wiz) after it declared bankruptcy, and later that year he acquired the Clearview Cinema chain. Both units remain loss-makers, and as for the promised synergies-"Clearview theater lobbies will be a great place to display some of our products, like our high-definition television and video-on-demand," Mr. Dolan said at the time-well, when was the last time you saw a Cablevision display booth in a Clearview movie house? Make no mistake, Jimmy Dolan is a deal guy, and there have been some very good deals. In 1997, he made a deal with John Malone and TCI in which Cablevision gained 820,000 regional subscribers in exchange for TCI taking a stake in Cablevision. He also was instrumental in pulling the plug on Cablevision's partnership in the now-bankrupt Internet service provider Excite@Home before other investors (such as AT&T) did. While his dad is famous for sitting back and saying no-Chuck Dolan refused to sell out to Time Warner in 1993-the son, say bankers who have worked with him, is always eager to deal. Indeed, they say, Jimmy Dolan was on the verge of selling Rainbow Media to Barry Diller early in 2001, before Chuck Dolan swooped in and took the deal off the table. Now-perhaps not coincidentally-Jimmy is beginning to assume a larger public profile. He was front and center in organizing the Concert for New York City at the Garden on Oct. 20 to raise funds for the families of the World Trade Center victims. And he attended the press conference announcing the signing of Allan Houston's $100 million contract. Mr. Dolan also seems to be easing into his identity as a media player. This March, he is set to remarry in Florida-he has four children from a previous marriage-and Rupert Murdoch and Viacom's Mel Karmazin reportedly have received invitations. Nonetheless, his presence around New York remains a little ghostly. Forty-five years old, he lives next-door to his father. He sails a yacht and plays the guitar in his own garage-style band, the Simpson House Band. There are echoes of a George W. Bush–like reckless youth followed by salvation: Mr. Dolan has admitted to having been an alcoholic and chemically dependent, and he has been sober for the last nine years. If there is one thing that would permanently bring him out from behind his father's shadow, it would be the sale of the cable systems-especially if he could finagle a price higher than the $4,500 per subscriber that Brian Roberts at Comcast is paying for AT&T Broadband. To that end, he has sunk over $2 billion into upgrading the system, to a point where he thinks he can charge over $100 per month to customers. While it's certainly doubtful that his subscribers will eventually be worth $10,000 a head due to all sorts of interactive e-commerce type offerings, as he recently said to Forbes , if he can get a price well north of $4,500, he might well do it. It would be a smart move, too. The growth numbers for cable subscribers remain soft, and the specter of further market-share encroachment on the part of satellite-television providers is a constant one. AOL Time Warner is looking to deal-and on a sentimental note, Gerald Levin, who started out in the cable business with Chuck Dolan in the early 1970's, is retiring this May. So the Dolans might be very happy if Mr. Dolan turns their Cablevision stock into cash or AOL Time Warner stock while keeping his grip on the really fun stuff-the Knicks, the Rangers, the Rockettes, the TV programming. And if the Knicks don't make the playoffs, so what? Madison Square Garden's cash flow will take a hit, but they'll have the money to hire a very expensive new coach.