Filing alleges Dolan created fake group

[joep]

http://www.newsday.com/business/ny-bzcabl0414,0,6477452.story?coll=ny-top-headlines

Filing alleges Dolan created fake group


BY HARRY BERKOWITZ
STAFF WRITER

April 13, 2005, 4:21 PM EDT

Even though the story of Voom is all but ended, a 43-page filing that became public Wednesday provides more evidence of how bizarre the battle over the satellite TV service has been between Cablevision and its own chairman, Charles Dolan.

The joint filing to the Federal Communications Commission by Cablevision and satellite TV rival EchoStar Communications claims that a consumer group that sided with Dolan in trying to block the sale of Voom's sole satellite does not really exist.

Dolan and the purported group, the Association of Consumers to Preserve and Promote DBS (direct-broadcast satellite) Competition," told the FCC in a March 28 joint filing that Cablevision's deal to sell the satellite to EchoStar for $200 million would reduce competition and hurt consumers. Instead, they argued, Dolan should be able to buy the satellite to keep Voom alive.

Last week, the 15-member Cablevision board reconfirmed its decision to shut Voom rather than hand it over to Dolan, and this time the vote was unanimous, including Dolan.

But that still left the requirement for Cablevision, which on March 29 disavowed Dolan's FCC filing, to elaborate on its argument that the filing should be ignored. Otherwise, Cablevision could face a lawsuit from EchoStar, which has called Dolan's filing perplexing.

Not only is Dolan's contention now moot, given the Voom shutdown, Cablevision and EchoStar claim in the filing, but "all available evidence strongly suggests that the association is a mere fiction, created by a single individual, Dr. Jerome Sandler, for the sole purpose of filing the petition."

A voicemail message left yesterday at Sandler's home in Rockville, Md., was not returned.

The new filing also expands on the argument that EchoStar -- whose service Cablevision, the nation's sixth biggest cable operator, has mocked in advertisements -- should be strengthened to benefit consumers, especially in rural areas, which have been slower to gain access to HDTV channels.

The unusual battle pitted Dolan against his chief executive son James, a longtime opponent of Voom who signed the contract to sell the satellite.

According to the new filing, over the past six years, Cablevision invested $1 billion in Jericho-based Voom, which stressed high-definition channels. But it only attracted 40,000 customers, mainly in urban areas, and had less than $15 million in revenue.

EchoStar was gaining customers at the rate of 40,000 customers every 10 days. Voom suffered "astoundingly high" customer dropout rates, suggesting a low likelihood of viability," the filing states.

On Monday, Dolan, who last month ousted three directors who had condoned the deal to sell the satellite, plans to drop three more, cutting the size of the board to 12, including nine who do not require approval by non-Dolan shareholders.

A Cablevision spokesman did not immediately return a call seeking comment from the company or Dolan.

 

[Amphicar770]

While Voom may be dead, we can still hope that the last chapter has yet to be written. ... The one where Junior is tossed from the corner office and forced to seek a new job more suitable to his business talents (perhaps cleaning out septic tanks).

 

[rad]

While Voom may be dead, we can still hope that the last chapter has yet to be written. ... The one where Junior is tossed from the corner office and forced to seek a new job more suitable to his business talents (perhaps cleaning out septic tanks).

Why, because he stopped the flow of $'s leaving Cablevision and protecting shareholder value???

 

[Amphicar770]

Why, because he stopped the flow of $'s leaving Cablevision and protecting shareholder value???

He protected the day traders whose vision does not extend beyond next quarter. By your logic, both E* and D* should have been shut down long ago.

Even without Voom, CableVision is a business disaster and James track record is hardly enviable.

 

[rad]

He protected the day traders whose vision does not extend beyond next quarter. By your logic, both E* and D* should have been shut down long ago.

Even without Voom, CableVision is a business disaster and James track record is hardly enviable.

But for D* and E* at least they have more then 40K customers at the end of 15 months.

 

[James Long]

But for D* and E* at least they have more then 40K customers at the end of 15 months.

According to the filing at the root of this article, Echostar added 40,000 customers every 10 days that Voom was on the air.

BTW: The headline is wrong but the article corrects - the allegation is that a single individual Dr. Jerome Sandler created the association, not C Dolan.

JL

 

[philhu]

But for D* and E* at least they have more then 40K customers at the end of 15 months.

Actuaslly they did, but not by much

When dtv came out, boxes were manufactured by one company, who charged $715- $1100 (in 1991 dollars) for a box.

DTV had 47,500 subs after 12 months. At that point, they allowed others to make the boxes, which burst it all wide open and they got subs right and left.

The analogy is not that far different. DTV lost money for *7+* YEARS.

 

[Walter L.]

"43-page filing that became public Wednesday"

So, where's the filling?

 

[James Long]

The analogy is not that far different. DTV lost money for *7+* YEARS.

What percentage of the DBS market did D* have during those 7 years? Were they ever not the #1 DBS provider?

#1 and #2 are very close together at the top - and the #3 provider has 4% of the DBS market. #4 barely cleared a tenth of a percent of market share.

"43-page filing that became public Wednesday"
So, where's the filling?

http://satelliteguys.us/showthread.php?t=63385

JL

 

[rtt2]

Here is the growth of the DBS and satellite industry.
http://www.rfd-tv.com/dthnumb.html

From the SBCA website (SBCA is the Satellite industry's national trade organization) "Thomson Consumer Electronics sells first DSS system to consumer in Jackson, MS in mid*June. Company, joined by DIRECTV and USSB, launch the first national advertising campaign in DTH history. Thomson ships nearly 600,000 DSS systems by year’ end, DIRECTV/USSB report about 350,000 subscribers on*line"
http://www.sbca.com/key_dates.html

As you can see growth was very fast and dwarfed VOOM's record. Voom was in business for what a year and a half? and got 40,000-50,000 subs, and blew over a billion dollars.

 

[rad]

Here is the growth of the DBS and satellite industry.
http://www.rfd-tv.com/dthnumb.html

From the SBCA website (SBCA is the Satellite industry's national trade organization) "Thomson Consumer Electronics sells first DSS system to consumer in Jackson, MS in mid*June. Company, joined by DIRECTV and USSB, launch the first national advertising campaign in DTH history. Thomson ships nearly 600,000 DSS systems by year’ end, DIRECTV/USSB report about 350,000 subscribers on*line"
http://www.sbca.com/key_dates.html

As you can see growth was very fast and dwarfed VOOM's record. Voom was in business for what a year and a half? and got 40,000-50,000 subs, and blew over a billion dollars.

Thanks for the research, I was trying to find some of the old numbers since I knew it had to be more then 47,500. I know I was an early adopter since I purchased the first Sony A1 system when Circuit City got them in our area.

 

[rtt2]

You know what is the funniest is that Alphastar lasted less than a year and got a little more than 37,000 subs. Almost the amount Voom got and they spent a fraction of what Voom did.

 

[philhu]

Yep, I stand corrected.

The numbers I have are month *1*, not year *1*

Sorry for the misread

 

[Amphicar770]

Why, because he stopped the flow of $'s leaving Cablevision and protecting shareholder value???

Selling Voom may have been the right thing for CVC, but the way it was handled was probably not in the best long-term interests of everyone.

Jimmy likely could have sold the entire operation for considerably more than he received by pawning the bird seperately.

Instead of $200mil he might have sold the entire company for $350mil to Charles or some other investor. This would have been a win-win.

The new owner would now have a service with much lower initial fixed costs than CVC ever had. They would have started with 40k subs which is a small number but at least provides some revenue. The lineup is where it should have been from the start, the technical glitches have been ironed out, and the DVR is allegedly about ready. I see it as analogous to the original Iridium service. Motorola could never recoup its investment in Iridium. The new buyers of Iridium paid pennies on the dollar and could thus make it profitable and continue the operation.

In this scenario, CVC would have received a higher price for the assets AND Voom could have had a chance at surviving as a viable business entity.

So yes, Jimmy still needs to go.....

 

[rad]

Instead of $200mil he might have sold the entire company for $350mil to Charles or some other investor. This would have been a win-win.

So what prevented Charles from coming up with the $350M to do what you proposed (unless nobody bought into his 'vision')?

 

[NightRyder]

(unless nobody bought into his 'vision')?

IMO: That is at the root of the problem.

If anyone besides C. Dolan would have come forward as a buyer, there probably would have been a sale. Selling VOOM at 1/3 the price of the capitol invested, to the man who convinced CVC to create and fund it, would have invited a mountain of CVC shareholder lawsuits and a vigorous investigation from the FTC.


NightRyder

 

[T2k]

Actuaslly they did, but not by much

When dtv came out, boxes were manufactured by one company, who charged $715- $1100 (in 1991 dollars) for a box.

DTV had 47,500 subs after 12 months. At that point, they allowed others to make the boxes, which burst it all wide open and they got subs right and left.

The analogy is not that far different. DTV lost money for *7+* YEARS.

I'm sick and tired of reading that NOBODY, not even Newsday can get the frikkin facts straight.
*Voom had already 46k subs by the end of February*, when the $1 deal was running for ~3 months only - so most likely they signed up new subs in the 5-10k range during March, which would bring the total over 50k.

 

[Amphicar770]

So what prevented Charles from coming up with the $350M to do what you proposed (unless nobody bought into his 'vision')?

Because, as has been well reported in the press, Little Jimmy did a back room deal and sold the sat. That is why Charles was off in Colorado trying to get Ergen to call off the deal. Had he been successful then he likely would have come up with the funds to buy Voom in its entirety. I suspect that charles Dolan has enough money that he could have easily written a check for $350 mil all on his own.

 

[John Kotches]

T2K says:

I'm sick and tired of reading that NOBODY, not even Newsday can get the frikkin facts straight.
*Voom had already 46k subs by the end of February*, when the $1 deal was running for ~3 months only - so most likely they signed up new subs in the 5-10k range during March, which would bring the total over 50k.

So? Profitability was at least half a million customers away, maybe more. The $1 install pushes out the profit point even further, as you have to hold on to each customer longer to offset the equipment costs.



Amphicar says:

Because, as has been well reported in the press, Little Jimmy did a back room deal and sold the sat. That is why Charles was off in Colorado trying to get Ergen to call off the deal. Had he been successful then he likely would have come up with the funds to buy Voom in its entirety. I suspect that charles Dolan has enough money that he could have easily written a check for $350 mil all on his own.

Voom was bleeding $$$ at the $100/million a quarter mark. That's how you become an ex-billionaire.

Let's be realistic here, there was > $200 million in new satellite commitments + losses + buyout costs so Charles Dolan could go broke pretty quickly "all on his own".

Yes, it sucks that Voom is going away, but anyway who thinks that it was anything other than a prudent business decision isn't thinking about it from a financial perspective in a lean economic period.

 

[Amphicar770]

Yes, it sucks that Voom is going away, but anyway who thinks that it was anything other than a prudent business decision isn't thinking about it from a financial perspective in a lean economic period.

I DO agree that CVC needed to walk away from Voom as they had incurred too much debt and too many obligations. Just as Motorola needed to walk away from Iridium. Iridium was a money pit with no hope of becoming profitable, they even talked about just dropping the sats into the ocean.

On the other hand, I think that had CVC sold Voom as a package deal they would have made more money from the sale. Likewise, a new company without the baggage could have made a go of it just as the new Iridium has done. When Motorola sold Iridium for pennies on the dollar, the new buyer did not incur the debts and obligations. Even though they kept the name it was an entirely new corporate entity.

I think that Jimmy just wanted to get out and signed the very first offer that came his way before the old man realized what he had done.

While it is a long shot, FCC could still nix the deal. They could tell CVC to sell the entire operation to someone who will maintain it as a 3rd alternative. I do not believe this will happen, but if it does the residual value will be a heck of a lot less than it was just two weeks ago.