Cablevision directors order chairman to back off
By David Lieberman, USA TODAY
NEW YORK — The father-son clash at Cablevision Systems (CVC) intensified Thursday as a committee of independent directors charged that company founder Charles Dolan is engaging in marketing practices "likely to deceive" people into believing the firm still supports his pet project: a high-definition TV satellite service called Voom.
In a letter to Dolan, the directors say that the company — after voting Monday to end Voom — agreed to keep it alive a little longer while he tried to arrange a deal with EchoStar to take the service off Cablevision's hands. But when Cablevision took down the Web site to sign up customers for Voom, Dolan created a new one, identical to the old, at a different address.
The directors ordered Dolan to stop, saying that his action is "an expansion rather than a shutdown of the business" and is "being done with funds that have not been authorized" by the board.
Matters could come to a head at a board meeting on Monday where Dolan will discuss his plans.
There'll probably be frost in the air as Dolan, chairman of the No. 6 cable operator, faces his son, CEO James Dolan, who has led the opposition to Voom.
Charles Dolan will have more allies at this board meeting, though. Late Wednesday, he reasserted control over the company, naming four industry veterans — John Malone, Frank Biondi, Rand Araskog and Leonard Tow — to replace three directors and fill a fourth seat vacant because of the death of a member. And he will ask the board on Monday to create a seat for his son-in-law.
The soap opera has caught the attention of the Securities and Exchange Commission. Cablevision said Thursday that regulators have launched an informal inquiry into trading activity as the company grappled with Voom.
Investors responded by driving shares down 5.3% to $28.65.
"The Alice in Wonderland Dolan family/boardroom struggle at Cablevision must surely rank as one of the most Byzantine in memory," Sanford C. Bernstein's Craig Moffett said in a report. "... It has now taken a turn from the simply strange to the truly bizarre."
