PDATE 1-Cablevision chairman lays out plan for Voom
Mon Mar 7, 2005 06:05 PM ET
(Recasts first paragraph, headline; adds Sears comment, stock price)
By Kenneth Li
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CVC.N (CABLEVISION SYS)
Last: 29.29
Change: +0.80
Up/Down: +2.81%
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UPDATE 1-Cablevision chairman lays out plan for Voom
Cablevision chairman to lay out plan for Voom
Voom assures Sears on continued service-WSJ
NEW YORK, March 7 (Reuters) - Cablevision Systems Corp. (CVC.N: Quote, Profile, Research) Chairman Charles Dolan on Monday presented details of an ambitious plan to purchase the remaining assets of a satellite venture that lost $661.4 million last year.
A board meeting of the company in Florida adjourned at 3 p.m. (2000 GMT). A company spokeswoman declined to comment and said there would be no official statement on Monday.
Wall Street analysts and media industry observers said last week it was unclear how Dolan plans to pay for Cablevision's Voom assets, which include 21 high-definition programming channels, a lease on a satellite and the 46,000 subscribers he says Voom has.
Cablevision on March 3 extended a deadline to shut down the Voom service to give the chairman "further opportunity" to present a credible plan to the board.
A spokeswoman for Sears, Roebuck and Co. (S.N: Quote, Profile, Research) , the largest retailer of the service, said late on Monday the company plans to continue selling the Voom service at its retail locations. "The policy is Sears will continue selling Voom," spokeswoman Lauren Jiles-Johnson said.
The cost of running the Voom service over the next two years has been estimated at more than $1 billion by Richard Greenfield at Fulcrum Global Partners.
Anticipating Dolan's plans, which he presented to the board on Monday, is difficult because his actions thus far have diverged from conventional business logic, Sanford C. Bernstein analyst Craig Moffett said.
But Dolan, who launched the premium cable channel HBO in the early 1970s and who made cable television a household fixture in New York over more than three decades, has in the past demonstrated a knack for spotting value.
The 78-year-old chairman could be betting the future of the cable and sports company that he founded in 1973 and that now holds a richly valued New York area subscriber base of 3 million, analysts said.
This time, his repeated attempts to keep Voom alive have drawn the attention of regulators, who launched an informal inquiry into stock trades during the satellite venture's unwinding.
Dolan's attempts to buy the remaining Voom assets have also pitted him against his son James, who is Cablevision's chief executive, and other board members who believe the company should further distance itself from a business traditionally viewed as a competitive threat to its core cable television service.
That struggle has led some Wall Street analysts to speculate Charles Dolan may sell off part or all of Cablevision to finance Voom.
A stern letter to Charles Dolan from board member Victor Oristano, representing the company's independent and Class A shareholders, suggested his plans could jeopardize an earlier agreement to sell off Voom's one satellite for an estimated $200 million to EchoStar Communications Corp. (DISH.O: Quote, Profile, Research) .
UBS analyst Aryeh Bourkoff said a reversal of that deal would mean Cablevision loses the $200 million of expected proceeds from the sale and would have to continue to try to run the money-losing business.
"A possible reversal could reintroduce a value-destructive asset to the company, compounded with removal of $200 million of anticipated proceeds," he said.
The Oristano letter, filed with the U.S. Securities and Exchange Commission last week, briefly mentions discussions that Charles Dolan intended to have with rival EchoStar.
The talks would center on combining the satellite and licenses that have been pledged to EchoStar with the rest of the satellite business, which is what Dolan intends to buy.
With control of super-voting class B shares, Charles Dolan last week removed three board members who had opposed him. He replaced them with a slate of media industry heavyweights including Liberty Media Corp. (L.N: Quote, Profile, Research) Chairman John Malone and former Viacom Inc. (VIAb.N: Quote, Profile, Research) President Frank Biondi Jr.
Charles Dolan has about 37 percent direct ownership of a family trust that controls 75 percent of Cablevision's vote.
He also plans to request an additional board seat for Brian Sweeney, senior vice president of e-media at Cablevision, who is also his son-in-law.
Shares of Cablevision rose 80 cents, or 2.8 percent, to $29.29 on the New York Stock Exchange on Monday.
Mon Mar 7, 2005 06:05 PM ET
(Recasts first paragraph, headline; adds Sears comment, stock price)
By Kenneth Li
FACT BOX
CVC.N (CABLEVISION SYS)
Last: 29.29
Change: +0.80
Up/Down: +2.81%
Quote
Full Chart
Company Profile
Research Reports
News for CVC.N
UPDATE 1-Cablevision chairman lays out plan for Voom
Cablevision chairman to lay out plan for Voom
Voom assures Sears on continued service-WSJ
NEW YORK, March 7 (Reuters) - Cablevision Systems Corp. (CVC.N: Quote, Profile, Research) Chairman Charles Dolan on Monday presented details of an ambitious plan to purchase the remaining assets of a satellite venture that lost $661.4 million last year.
A board meeting of the company in Florida adjourned at 3 p.m. (2000 GMT). A company spokeswoman declined to comment and said there would be no official statement on Monday.
Wall Street analysts and media industry observers said last week it was unclear how Dolan plans to pay for Cablevision's Voom assets, which include 21 high-definition programming channels, a lease on a satellite and the 46,000 subscribers he says Voom has.
Cablevision on March 3 extended a deadline to shut down the Voom service to give the chairman "further opportunity" to present a credible plan to the board.
A spokeswoman for Sears, Roebuck and Co. (S.N: Quote, Profile, Research) , the largest retailer of the service, said late on Monday the company plans to continue selling the Voom service at its retail locations. "The policy is Sears will continue selling Voom," spokeswoman Lauren Jiles-Johnson said.
The cost of running the Voom service over the next two years has been estimated at more than $1 billion by Richard Greenfield at Fulcrum Global Partners.
Anticipating Dolan's plans, which he presented to the board on Monday, is difficult because his actions thus far have diverged from conventional business logic, Sanford C. Bernstein analyst Craig Moffett said.
But Dolan, who launched the premium cable channel HBO in the early 1970s and who made cable television a household fixture in New York over more than three decades, has in the past demonstrated a knack for spotting value.
The 78-year-old chairman could be betting the future of the cable and sports company that he founded in 1973 and that now holds a richly valued New York area subscriber base of 3 million, analysts said.
This time, his repeated attempts to keep Voom alive have drawn the attention of regulators, who launched an informal inquiry into stock trades during the satellite venture's unwinding.
Dolan's attempts to buy the remaining Voom assets have also pitted him against his son James, who is Cablevision's chief executive, and other board members who believe the company should further distance itself from a business traditionally viewed as a competitive threat to its core cable television service.
That struggle has led some Wall Street analysts to speculate Charles Dolan may sell off part or all of Cablevision to finance Voom.
A stern letter to Charles Dolan from board member Victor Oristano, representing the company's independent and Class A shareholders, suggested his plans could jeopardize an earlier agreement to sell off Voom's one satellite for an estimated $200 million to EchoStar Communications Corp. (DISH.O: Quote, Profile, Research) .
UBS analyst Aryeh Bourkoff said a reversal of that deal would mean Cablevision loses the $200 million of expected proceeds from the sale and would have to continue to try to run the money-losing business.
"A possible reversal could reintroduce a value-destructive asset to the company, compounded with removal of $200 million of anticipated proceeds," he said.
The Oristano letter, filed with the U.S. Securities and Exchange Commission last week, briefly mentions discussions that Charles Dolan intended to have with rival EchoStar.
The talks would center on combining the satellite and licenses that have been pledged to EchoStar with the rest of the satellite business, which is what Dolan intends to buy.
With control of super-voting class B shares, Charles Dolan last week removed three board members who had opposed him. He replaced them with a slate of media industry heavyweights including Liberty Media Corp. (L.N: Quote, Profile, Research) Chairman John Malone and former Viacom Inc. (VIAb.N: Quote, Profile, Research) President Frank Biondi Jr.
Charles Dolan has about 37 percent direct ownership of a family trust that controls 75 percent of Cablevision's vote.
He also plans to request an additional board seat for Brian Sweeney, senior vice president of e-media at Cablevision, who is also his son-in-law.
Shares of Cablevision rose 80 cents, or 2.8 percent, to $29.29 on the New York Stock Exchange on Monday.
