Cablevision Board To Debate Voom Fate

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They can only sell it to Dolan if no one else wants it.

Dish and Direct would be able to outbid Dolan. They have a responsibilty to their shareholders to sell to the highest bidder.
 
FrankJo said:
They can only sell it to Dolan if no one else wants it.

Dish and Direct would be able to outbid Dolan. They have a responsibilty to their shareholders to sell to the highest bidder.

New story at Newsday:


http://www.newsday.com/business/ny-bzvoom0121,0,3645643.story?coll=ny-business-leadheadlines

Analysts questioned how the Dolans could personally finance Voom's hundreds of millions of dollars in losses short of selling their big stake in Cablevision or even selling Cablevision, which has long been desired by Time Warner, which runs the nation's second biggest cable TV service.

The board may be reluctant to grant the Dolans major breaks if they try to buy Voom, given the scrutiny directors would face from investors in such a transaction.

"We find it fascinating that the Dolans are considering buying Voom, themselves," independent analyst Richard Greenfield of Fulcrum Global Partners told investors, putting the cost of buying it at $200 million. "While we believe the Dolans might have enough liquid capital to acquire Voom ... it is hard to imagine they have adequate liquid capital to fund Voom's ogoing operating loses. Unless they have third-party capital lined up, we wonder whether it might imply a greater willingness to sell the core cable system assets."
 
Newsday's latest update, posted just over an hour ago:

Dolan family may emerge as bidders to buy Voom

BY HARRY BERKOWITZ NEWSDAY STAFF WRITER

January 20, 2005, 1:34 PM EST

Charles Dolan may personally try to buy the Voom satellite TV service from Cablevision Systems Corp., where he is chairman and where the board of directors has rejected his wishes for the company to keep funding the deeply troubled operation, he told employees in a remarkable internal memo.

The memo from the billionaire founder of Cablevision and his son Thomas, who runs Voom, was sent to Voom staff on Wednesday, the day after the board, by a narrow majority that included chief executive James Dolan, reiterated its demand to sell it or shut it down.

Calling the vote "startling," Charles and Thomas Dolan said in the memo that it reflects "today's post Enron regulatory climate, which places great emphasis on the potential legal liability of directors who sit on the boards of corporations involved with new enterprises such as RDBS," referring to Rainbow DBS, the formal name for the direct-broadcast-satellite service.

The issue has created an extraordinary split between those Dolans and CEO James, who is also the chairman's son. Another son, Patrick, is also on the board, but it could not be learned whether he is siding with Charles and Thomas or James.

"Potential bidders for RDBS include members of the Dolan family," the memo states. "We love working with a skilled group as dedicated as the RDBS staff, and we love the Voom project."

The contents of the memo, which found its way onto the Internet, was confirmed by sources who have seen the original.

Analysts questioned how the Dolans could personally finance Voom's hundreds of millions of dollars in losses short of selling their big stake in Cablevision or even selling Cablevision, which has long been desired by Time Warner, which runs the nation's second biggest cable TV service.

Cablevision is the New York metroplitan area's biggest cable service, with 3 million subscribers, and the sixth biggest in the nation.

The board may be reluctant to grant the Dolans major breaks if they try to buy Voom, given the scrutiny directors would face from investors in such a transaction.

Last month, the board canceled plans to spin off Voom, which has cost the company hundreds of millions of dollars and attracted few subscribers, as part of a separate risk-oriented company. That vote was 8-6, according to a Wall Street source. That decision followed months of repeated delays as the spinoff plan failed to win Securities and Exchange Commission approval.

Analysts say that it would be difficult to sell Jericho-based Voom, which began service in October 2003 and attracted only 26,000 subscribers as of last Sept. 30, as a going business. Instead, Cablevision might find a buyer for Voom's single satellite, worth an estimated $250 million, and its government-granted licenses for frequencies and an orbital slot.

But Charles and Thomas Dolan are pushing for Voom to survive as a business.

"It is our expectation that RDBS will be offered for sale as an operating business," the memo states. "To do otherwise risks minimizing the return to Cablevision. Sale of RDBS requires RDBS to continue to operate normally. Should RDBS, the business, be sold, RDVS staff will simply work under new ownership."

Analysts have been urging that Voom be dropped as quickly as possible so that it does not further drain Cablevision finances, especially at a time when the Bethpage-based company has been trying to prove it can start generating ongoing, reliable profits after years of heavy spending and risky side ventures.

"We find it fascinating that the Dolans are considering buying Voom, themselves," independent analyst Richard Greenfield of Fulcrum Global Partners told investors, putting the cost of buying it at $200 million. "While we believe the Dolans might have enough liquid capital to acquire Voom ... it is hard to imagine they have adequate liquid capital to fund Voom's ogoing operating loses. Unless they have third-party capital lined up, we wonder whether it might imply a greater willingness to sell the core cable system assets."

The Dolan memo asks and thanks Voom employees for their "patience during this potentialy confusing period."
 
Just because DirecTV could outbid Dolan doesn't mean that they will.

Simply put, Dish is in the better position of the two existing DBS providers to make money off the Voom assets, so they should be able to outbid DirecTV for it, but that doens't mean that DirecTV won't bid on it just to keep Dish from getting it too cheap.

Then again, Dolan might be willing to put his money where his mouth is and outbid the others. I will say this: Dolan is in his late 70's and worth a lot of cash. His family isn't going to starve either way and he has an entreprenurial spirit, so I certainly wouldn't count him out on dropping his checkbook on the table and asking "How much?"
 
> why haven't we gotten updated subscriber numbers lately?

Because the quarterly report does not come out till February. The previous number was from the previous quarterly report.

Hong.
 
"While we believe the Dolans might have enough liquid capital to acquire Voom ... it is hard to imagine they have adequate liquid capital to fund Voom's ogoing operating loses. Unless they have third-party capital lined up, we wonder whether it might imply a greater willingness to sell the core cable system assets."

Buying Voom is one thing, being able to run it, is another.

Selling the cable assets is out of the question. Forget about it. It ain't gonna happen. Maybe Dolan himself would sell his shares in Cablevision. But, he still wouldn't have money to run Voom. Outside investors? Unlikely given the hundreds of millions of dollars that would be involved.
 
WE may not have gotten updated subscriber numbers, but does anyone seriously believe the Board of Directors didn't have up-to-the-moment numbers on Tuesday (not to mention back in December when they originally voted to stop funding VOOM?)
 
Mr.Poindexter, this is what i wrote a few pages back.

There are 2 scenarios here:

1. Neither Dish nor DirectTV want Voom, in which case Dolan could buy it.

2. If either Dish or DirectTV have an interest in purchasing Voom, Dolan is out. Both of those companies will easily be able to outbid Dolan. Cablevision has a fudiciary responsibility to its shareholders to get the best deal possible. If Dish has an interest in purchasing Voom, expect DirectTV to at least enter the bidding as well, just to drive the price up. The number would end up being higher than 125 million. Dish will not break its bank to get Voom, though. If the cost were to get too high, they would bail. Dish will get in for the right price, but is not going to stretch itself.

We're talking about Voom and the channels, and nothing else. Cablevision would have no interest in selling any of its' other assets.

Dish has the most to gain. They can add more HD programming and a satellite (bandwith bandwith) to boost. I think that what Dish might be most interested in is Vooms channels. They would instantly be able to say that they offer the most HD of any satellite service. Most of Vooms channels don't cost gobs of money to run. The would mean that Dish would have it's own version of HDnet or INHD, with way more content. (Remember, Dish does sell HD television packages. They do have some level of commitment to HD. What better way than to entice consumers with "the most HD anywhere".) Once Mpeg4 takes hold, cable systems, with the added bandwith, could offer those channels as part of a greatly expanded HD line-up. They could better position themselves against DirectTV. What is most important here is that Dish would need to offer those VOOM channels to BOTH SD and HD subscribers (for Dish subscribers). There is good content there, that should not be limited to it's HD pack subscribers. (they could obviously eliminate some of the 21 channels to cut costs as well. 10-15 channels would be a good number.)

We really have no way of knowing how much interest d* or e* actually have in voom. We'll find out soon. I just don't think Dolan can keep it going, even if he buys it.
 
FrankJo said:
Mr.Poindexter, this is what i wrote a few pages back.



We really have no way of knowing how much interest d* or e* actually have in voom. We'll find out soon.
Thats the most insightful thing Ive heard in weeks.
 
As I stated earlier Charlie Ergan and company have been doing meetings with Cablevision and Voom over the last 3 months. You can read about the possible reasons in the Dish forums. However, there are some interesting things to think about.

Charlie has been trying to buy more sattelites (he even tried to buy the manufacture of the Spaceway sats to get them). Charlie has more liquid cash than the Dolans right now. He also has 12 million (not thousands) subscribers to sell VOOM content to. He could condense those 21 channels to 15 and they would be very nice to have.

On the last Charlie Chat there was meantion of some very good news coming out in Feburary. Charlie also meantioned a fall time schedule for MPEG4 conversion for HD. Seems VOOM is on the exact same schedule.

Best scenario -- E* buys VOOM and condenses HD channels and adds more HD content to improve VOOM's HD overall. SD content will be dropped by VOOM because E* alreadys offers it. The new E* sat going to 89 along with VOOM's sats will have enough bandwith to offer great looking HD along with LIL HD in the top 30 to 40 markets.

He prices this at $49 to $59 a month and I believe in a few months the new and improved VOOM will be looking at several million HD subscibers (in the 2 to 4 mill range). :)
 
The most ironic thing is that no one over in the d* or e* forums is talking about voom, which makes me wonder how much real interest there is in it, and what's going on.

I already know we're interested in it. Hell , i'm interested in it and i don't even subscribe anymore.
 
From "the Street.com":

Memo Spells Doom for Voom

By George Mannes
Senior Writer
1/20/2005 12:38 PM EST
Click here for more stories by George Mannes
Cablevision (CVC:NYSE - commentary - research) is trying to sell Voom, and members of the cable operator's controlling family may be buyers, according to what appears to be an internal company memo.
The memo, if authentic, confirms previous reports that Cablevision's board has been divided over the fate of its money-bleeding startup satellite service, and that a majority of directors were in favor of giving up on the venture.

The memo also serves to hearten many Cablevision analysts and investors, given the prevailing belief outside of Cablevision that the Voom HDTV-focused satellite service has little chance of competing profitably with the likes of DirecTV (DTV:NYSE - commentary - research) and EchoStar (DISH:Nasdaq - commentary - research).




Cablevision's shares rose 77 cents Thursday to trade at $25.15.

A Cablevision spokesman didn't return a call requesting comment.

On Wednesday evening, the Internet site SatelliteGuys.US posted what purported to be a memo out of Cablevision's Rainbow Media Enterprises programming unit, addressed to RME's staff.

The memo, purporting to be from Charles Dolan -- chairman of both Cablevision and Rainbow -- and Tom Dolan -- Charles' son and CEO of Rainbow -- reports that on Tuesday, Cablevision's board, in a split vote, resolved "to sell or dispose of Rainbow DBS; i.e., VOOM and VOOM 21."

"It is our expectation that RDBS will be offered for sale as an operating business," continues the memo. "Potential bidders for RDBS include members of the Dolan family."

On Thursday, Fulcrum Global Partners analyst Richard Greenfield issued a report indicating that the memo -- which he reprinted but which appears to have been pulled from the SatelliteGuys.US site -- appeared to confirm Voom's impending sale.

"While we have not been able to confirm its authenticity with CVC corporate management," wrote Greenfield, "we have confirmed with two different Rainbow Media employees that such a memo was sent out yesterday afternoon by Charles and Tom Dolan."

Greenfield, who like other analysts on Wall Street is of the opinion that Voom was a value-devouring lost cause of Cablevision's, has a buy rating on the stock.

One would suppose that Greenfield would not be passing along the memo without some confidence in its authenticity, given the NASD's recent enforcement action against a colleague of his. Last Friday, the NASD announced it had fined Fulcrum wireless telecom analyst Walt Piecyk $75,000 on charges, which Piecyk neither admitted nor denied, that Piecyk had circulated a negative rumor about RF Micro Devices (RFMD:Nasdaq - commentary - research) without conducting "a reasonable inquiry into whether there was a basis for the rumor."
 
Mr.Poindexter said:
Just because DirecTV could outbid Dolan doesn't mean that they will.

Simply put, Dish is in the better position of the two existing DBS providers to make money off the Voom assets, so they should be able to outbid DirecTV for it, but that doens't mean that DirecTV won't bid on it just to keep Dish from getting it too cheap.

As far as D* goes:

From Newsday: (Dec 22)
“…Dolan has made efforts to persuade media baron Rupert Murdoch to become a partner with the Dolans in Voom, but has had little success. Murdoch's News Corp. has a 34 percent stake of DirecTV, which has 13.5 million satellite subscribers.”

And Scott Greczkowski posted this as far as E* goes:

From what I know Dish does not want VOOM, (they did but not any more) also speaking with some folks from the FCC it is a good posibility if Dish tried to buy VOOM the FCC would Vito it. They want a true 3 DBS option in the United States. VOOM has laid that groundwork down.

http://www.satelliteguys.us/showpost.php?p=282452&postcount=2
 
Maybe that's why they just had a couple DVR's to display at CES. Perhaps they knew that when it arrives, there will be a different logo on the box? Any Thoughts?
 
and this from "the Deal.com": (huge news day for VOom)

With Cablevision Systems Corp.'s board seemingly committed to selling or shutting down its nascent Voom satellite television business, the difficult task of finding a buyer for it can begin.
Provided, of course, that the Bethpage, N.Y.-based cabler goes through with a sale and there's a buyer for the service.

While media reports have Cablevision directors ready to jettison the unit, company patriarch Charles "Chuck" Dolan is passionate about Voom. And his influence over Cablevision's board and legacy of distinct disinterest in what Wall Street views as best for his company cannot be underestimated.

"While we are encouraged by steps taken by the board to shutter Voom, given Chuck Dolan's continued support of the plan and his influence over the voting power of [the company's] stock, uncertainty persists until there is greater clarity on the ultimate abandonment of the Voom strategy," UBS analyst Aryeh Bourkoff wrote in a note Wednesday.

Or as another source who requested anonymity put it, "Chuck Dolan is an old-school entrepreneur who likes to build assets. He has never wanted to sell anything in his life."

The Dolan family controls 75% of Cablevision's voting power, with Chuck Dolan himself staked to 41% of the vote. If he so desired, he could wield that power to reschedule another board meeting or nominate directors more in line with his agenda.

But in these heady times for corporate leaders who rule autocratically, such maneuvering could be viewed as delay tactics or worse.

Even if Cablevision goes through with a sale, bidders won't exactly trip over one another acquire the service. As of Sept. 30, 2004, Voom had only 26,000 subscribers and had lost more than $75 million. If figures like that aren't bad enough, the absence of board unanimity regarding Voom makes matters worse for Cablevision. The division doesn't exactly give the company leverage over potential buyers.

But Voom's value lies not in its subscriber base or financial performance but in its satellites. And those are likely to be of interest to News Corp.'s DirecTV Group Inc. and EchoStar Communications Corp., the two companies that dominate satellite television delivery.

Another company that could make a run at Voom is Pegasus Communications Inc. Pegasus is the largest of two membership classes of the National Rural Telecommunications Cooperative, which secures telecom services in remote areas. Its lead subsidiary, Pegasus Satellite Communications Inc., was the largest reseller of DirecTV until it filed for Chapter 11 bankruptcy protection and was eventually sold off to DirecTV for $875 million.

The parent company, however, still holds what is known as a Ka license, which the source said is useful for data rather than video transmissions. Pegasus could theoretically buy and reconfigure Voom's satellites to fits its needs. But with a market capitalization of only $135 million, Pegasus would likely have difficulty funding a transaction.
 
If you are going to be criticizing reporters and their journalism, Walter L., you should note that there is no official mention of the memo here anymore, either.
 
fredfa:
Get a grip!!! You don't have a clue of what I was trying to say. I don't have anything against good journalism. If you go back to my post and read carefully, you'll see that what I mean is that while other sources such as NEWSDAY are reporting the latest news (the Memo), Deal.com is still reporting old news from the day before (the board meeting). Deal.com doesn't seem to be aware of the memo yet. Maybe they report it tomorrow ;)
BTW, did you read what you posted here. That article mentions the memo.
 
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