Voom news boosts Cablevision stock
BY HARRY BERKOWITZ
STAFF WRITER
February 12, 2005
Cablevision's stock price rose more than 3 percent Friday on news that chairman Charles Dolan plans to personally take over the remaining pieces of the company's struggling Voom satellite TV service as a private business.
But announcement of the plan late Thursday left many unanswered questions that could dramatically affect Cablevision Systems Corp., its founding chairman and its chief executive James Dolan, who split with his father Charles over Voom.
Foremost among the questions is how Charles Dolan can raise financing for the money-losing venture, which has already cost Cablevision $1.4 billion.
"Investor speculation is now focused on his willingness to potentially sell Cablevision outright, including the highly coveted cable systems," said Merrill Lynch analyst Jessica Reif Cohen, adding that Voom needs $400 million in 2005 financing.
For Cablevision, unloading Voom quickly could save money. Although Dolan would not pay for the assets, he would assume some commitments.
Cablevision "could save roughly $100 million of cash flow from the wind-down of expenses," investment firm Friedman Billings Ramsey said of the Dolan plan for Voom, formally called Rainbow DBS. "We believe this change, which still hangs on financing, would remove the final overhang of the Rainbow DBS debacle."
Cablevision stock gained 87 cents per share to $27.46 Friday.
Dolan has to raise financing by Feb. 28, the deadline set by a special committee of four independent Cablevision directors for a definitive agreement.
"The Dolans' financing alternatives appear limited," Reif Cohen said. "We doubt a partner could be found to fund the cost of maintaining a niche commercial satellite video operation."
Dolan, a billionaire, controls 75 percent of Cablevision's shareholder vote and directly controls 30.8 million shares, worth $845 million, part of which he presumably could use as collateral.
Copyright © 2005, Newsday, Inc.
BY HARRY BERKOWITZ
STAFF WRITER
February 12, 2005
Cablevision's stock price rose more than 3 percent Friday on news that chairman Charles Dolan plans to personally take over the remaining pieces of the company's struggling Voom satellite TV service as a private business.
But announcement of the plan late Thursday left many unanswered questions that could dramatically affect Cablevision Systems Corp., its founding chairman and its chief executive James Dolan, who split with his father Charles over Voom.
Foremost among the questions is how Charles Dolan can raise financing for the money-losing venture, which has already cost Cablevision $1.4 billion.
"Investor speculation is now focused on his willingness to potentially sell Cablevision outright, including the highly coveted cable systems," said Merrill Lynch analyst Jessica Reif Cohen, adding that Voom needs $400 million in 2005 financing.
For Cablevision, unloading Voom quickly could save money. Although Dolan would not pay for the assets, he would assume some commitments.
Cablevision "could save roughly $100 million of cash flow from the wind-down of expenses," investment firm Friedman Billings Ramsey said of the Dolan plan for Voom, formally called Rainbow DBS. "We believe this change, which still hangs on financing, would remove the final overhang of the Rainbow DBS debacle."
Cablevision stock gained 87 cents per share to $27.46 Friday.
Dolan has to raise financing by Feb. 28, the deadline set by a special committee of four independent Cablevision directors for a definitive agreement.
"The Dolans' financing alternatives appear limited," Reif Cohen said. "We doubt a partner could be found to fund the cost of maintaining a niche commercial satellite video operation."
Dolan, a billionaire, controls 75 percent of Cablevision's shareholder vote and directly controls 30.8 million shares, worth $845 million, part of which he presumably could use as collateral.
Copyright © 2005, Newsday, Inc.
