The dueling Dolans
© 2005 Newsday
Feud over Voom reveals fractious family relations, clouds Cablevision’s future
BY HARRY BERKOWITZ
STAFF WRITER
March 2, 2005
An intense feud among members of the Dolan family continues to rage following the decision by Cablevision's board of directors to shut the failed Voom satellite TV service.
Members of the family that controls Cablevision Systems Corp. issued dueling press releases and conflicting memos to Voom employees after the board, backed by chief executive James Dolan, acted Monday to pull the plug over chairman Charles Dolan's objections.
Cablevision's stock price fell 2.2 percent yesterday as Wall Street tried to unravel the corporate soap opera and figure out what the family developments might mean for Cablevision, including whether it has become less or more likely that its cable systems or cable TV channels will be sold.
Charles Dolan and his son Thomas, Voom's chief executive, insisted in their joint memo that financing for them to take Voom off Cablevision's hands was "in place" and "members of the Dolan family" remain "committed to this bright and promising business" as Voom goes through a "period of uncertainty."
But yesterday Cablevision surprised those Dolans by posting a notice on Voom's Web site that replaced all other content: "Voom has ceased taking new customer orders and will shut down by the end of March."
CEO James Dolan - who referred to his father, Charles, and brother Thomas as "certain Class B shareholders" in his memo to Voom employees - indicated that Cablevision chief operating officer Tom Rutledge would lead the transition team to manage the shutdown.
"Are Dolan family dinners a thing of the past?" Fulcrum Global Partners analyst Richard Greenfield asked in a note to investors. "Regardless of the fate of Voom, we wonder whether irreparable harm has been done to Dolan family business relations. With Jim Dolan and the board overruling Jim's father and brother, we believe the potential for a sale of Cablevision is becoming ever more probable."
Some analysts, however, said that likelihood actually had decreased, because Charles Dolan no longer needs to sell Cablevision or a big chunk of his stake in it to raise hundreds of millions of dollars to finance the money-losing Voom.
"The disagreement highlights fractious relations among the Dolans, which may ultimately affect [Cablevision's] strategic direction," UBS analyst Aryeh Bourkoff told investors. The stock price, which had been rising partly because Cablevision was unloading Voom, dropped by 69 cents per share to $30.37 yesterday.
Charles and Thomas Dolan apparently had been buoyed by a rise in subscribers for Voom, which was offering installation in up to three rooms for $1.
Voom subscribers have increased to 46,262, including 5,622 who have been awaiting installation, compared with about 26,000 on Sept. 30, 2004, according to a source familiar with the numbers. That's still far short of the more than 10 million satellite customers DirecTV and EchoStar Communications each have. And Voom had an operating loss of $660 million for 2004.
Voom insiders said that as much as Charles Dolan wants to carry out his vision, he also has been intent on giving Thomas a moment in the spotlight as he has given James, the much more combative and aggressive younger brother.
"Everyone feels Chuck Dolan is doing this for Tom," one insider said.
But Thomas, a shy executive who majored in geology in college and headed computer technology systems at Cablevision, has had trouble stepping into a leadership role at Voom, especially one that could involve challenging his father, the insiders said.
One remaining mystery is which side Charles' son Patrick, who runs News 12 and is a board member, has taken in the feud, and which other family members were prepared to back Charles and Thomas. Cablevision is not telling, and neither are the Dolans.
"We are more than ever convinced of the viability of the Voom service," Thomas said in the release issued by him and his father. "If we are able to complete negotiations with Cablevision, we are certain that Voom HD will emerge as a robust new vendor providing a valuable alternative to the two services that now dominate the satellite industry."
The Voom story so far
October 2003: Cablevision launches Voom satellite TV service; plans to split it off as part of separate company.
May 2004: Problems emerge in attracting customers as Voom losses mount.
November 2004: Voom reveals it lost more customers than it attracted in the summer amid operational and marketing problems.
December 2004: Board, backed by CEO James Dolan, abandons spin-off and defies chairman Charles Dolan by deciding to sell or shut Voom.
January 2005: Cablevision agrees to sell Voom's sole satellite to EchoStar Communications for $200 million.
Feb. 10: Cablevision signs letter of intent to give rest of Voom to chairman Charles and Thomas Dolan if they arrange financing.
Feb. 28: Cablevision says it has no definitive agreement with the Dolans and will shut Voom. Dolans say they have financing, want a deal.
- Harry Berkowitz
© 2005 Newsday
Feud over Voom reveals fractious family relations, clouds Cablevision’s future
BY HARRY BERKOWITZ
STAFF WRITER
March 2, 2005
An intense feud among members of the Dolan family continues to rage following the decision by Cablevision's board of directors to shut the failed Voom satellite TV service.
Members of the family that controls Cablevision Systems Corp. issued dueling press releases and conflicting memos to Voom employees after the board, backed by chief executive James Dolan, acted Monday to pull the plug over chairman Charles Dolan's objections.
Cablevision's stock price fell 2.2 percent yesterday as Wall Street tried to unravel the corporate soap opera and figure out what the family developments might mean for Cablevision, including whether it has become less or more likely that its cable systems or cable TV channels will be sold.
Charles Dolan and his son Thomas, Voom's chief executive, insisted in their joint memo that financing for them to take Voom off Cablevision's hands was "in place" and "members of the Dolan family" remain "committed to this bright and promising business" as Voom goes through a "period of uncertainty."
But yesterday Cablevision surprised those Dolans by posting a notice on Voom's Web site that replaced all other content: "Voom has ceased taking new customer orders and will shut down by the end of March."
CEO James Dolan - who referred to his father, Charles, and brother Thomas as "certain Class B shareholders" in his memo to Voom employees - indicated that Cablevision chief operating officer Tom Rutledge would lead the transition team to manage the shutdown.
"Are Dolan family dinners a thing of the past?" Fulcrum Global Partners analyst Richard Greenfield asked in a note to investors. "Regardless of the fate of Voom, we wonder whether irreparable harm has been done to Dolan family business relations. With Jim Dolan and the board overruling Jim's father and brother, we believe the potential for a sale of Cablevision is becoming ever more probable."
Some analysts, however, said that likelihood actually had decreased, because Charles Dolan no longer needs to sell Cablevision or a big chunk of his stake in it to raise hundreds of millions of dollars to finance the money-losing Voom.
"The disagreement highlights fractious relations among the Dolans, which may ultimately affect [Cablevision's] strategic direction," UBS analyst Aryeh Bourkoff told investors. The stock price, which had been rising partly because Cablevision was unloading Voom, dropped by 69 cents per share to $30.37 yesterday.
Charles and Thomas Dolan apparently had been buoyed by a rise in subscribers for Voom, which was offering installation in up to three rooms for $1.
Voom subscribers have increased to 46,262, including 5,622 who have been awaiting installation, compared with about 26,000 on Sept. 30, 2004, according to a source familiar with the numbers. That's still far short of the more than 10 million satellite customers DirecTV and EchoStar Communications each have. And Voom had an operating loss of $660 million for 2004.
Voom insiders said that as much as Charles Dolan wants to carry out his vision, he also has been intent on giving Thomas a moment in the spotlight as he has given James, the much more combative and aggressive younger brother.
"Everyone feels Chuck Dolan is doing this for Tom," one insider said.
But Thomas, a shy executive who majored in geology in college and headed computer technology systems at Cablevision, has had trouble stepping into a leadership role at Voom, especially one that could involve challenging his father, the insiders said.
One remaining mystery is which side Charles' son Patrick, who runs News 12 and is a board member, has taken in the feud, and which other family members were prepared to back Charles and Thomas. Cablevision is not telling, and neither are the Dolans.
"We are more than ever convinced of the viability of the Voom service," Thomas said in the release issued by him and his father. "If we are able to complete negotiations with Cablevision, we are certain that Voom HD will emerge as a robust new vendor providing a valuable alternative to the two services that now dominate the satellite industry."
The Voom story so far
October 2003: Cablevision launches Voom satellite TV service; plans to split it off as part of separate company.
May 2004: Problems emerge in attracting customers as Voom losses mount.
November 2004: Voom reveals it lost more customers than it attracted in the summer amid operational and marketing problems.
December 2004: Board, backed by CEO James Dolan, abandons spin-off and defies chairman Charles Dolan by deciding to sell or shut Voom.
January 2005: Cablevision agrees to sell Voom's sole satellite to EchoStar Communications for $200 million.
Feb. 10: Cablevision signs letter of intent to give rest of Voom to chairman Charles and Thomas Dolan if they arrange financing.
Feb. 28: Cablevision says it has no definitive agreement with the Dolans and will shut Voom. Dolans say they have financing, want a deal.
- Harry Berkowitz
