J
johnnytv2004
Guest
Original poster
http://www.newsday.com/business/ny-bzvoom0119,0,4038866.story?coll=ny-
business-l\
eadheadlines
Dolans duking it out over Voom
Father and son Cablevision bosses split on booting unprofitable
satellite TV venture
BY HARRY BERKOWITZ
STAFF WRITER
January 18, 2005, 3:11 PM EST
Charles and James Dolan, the father and son who control Cablevision
Systems Corp., appear headed for an unprecedented showdown over
whether to abandon their ailing Voom satellite TV venture.
Charles Dolan, the Cablevision chairman and founder, apparently wants
to keep the nationwide satellite service that was launched in October
2003 alive even though it is losing hundreds of millions of dollars
and attracting few subscribers.
James Dolan, chief executive of the New York metro area's biggest
cable TV service, who has promised investors that Cablevision would
stop going off on costly tangents as it has repeatedly in the past,
apparently wants to end the all-but-failed experiment. That means
dropping Voom and possibly selling its sole satellite.
The Cablevision board of directors was reportedly taking up the issue
Tuesday in the face of complaints from analysts and investors that
Voom, which had only 26,000 customers as of Sept. 30, threatens to
continue to drain company profits and hold down the stock price.
"It would be very difficult for the independent directors to approve
additional spending for Voom," said Craig Moffett, an analyst for the
investment firm Sanford C. Bernstein & Co. "At the same time, it would
take something close to a boardroom coup for Chuck Dolan to force out
the independent directors in order to renew investment in Voom. In
this environment of corporate governance, that's an awfully hard
scenario to imagine."
That seemed to threaten a stalemate unless Charles Dolan bowed to his
son's view.
"Despite public sentiment, the company still does not appear to have
decided the ultimate outcome, with the board seemingly divided, though
tilted slightly in favor of selling or shutting it down," UBS
investment analyst Aryeh Bourkoff told investors, adding that
"dissension could lead to a public battle." The board meeting was
first reported Tuesday in the Wall Street Journal.
Last year, Cablevision planned to spin off Voom, along with cable
channels including AMC and IFC, as a separate company, ending the
drain on Cablevision profits.
But after repeatedly delaying the spinoff, citing the need for board
and regulatory approval, last month Cablevision suspended the plan,
saying in a filing that it would seek "strategic alternatives" for
Voom, which analysts took to mean a sale or shutdown.
But for Charles Dolan, 78, Voom could be the last hurrah in an
illustrious and visionary career that included founding HBO and that
often ignored naysayers who later proved to be too pessimistic. He
planned to leave Cablevision to become chairman of the spinoff
company, with another son, Thomas, becoming its chief executive and
James, 49, taking over as Cablevision chairman.
Even following the regulatory filing, Charles and Thomas sent a memo
to employees saying that Voom "continues to function on a normal daily
basis" and that dropping the spinoff plan in no way "changes the
fundamental premise that hard work and good performance will leave our
business with anything less than a very bright future," according to
Satellite Business News, which was read parts of the memo.
The father and son expressed confidence, "especially during this time
of increased board oversight."
But Voom, which posted a loss of $75 million in the third quarter of
last year and burned through an estimated $477 million last year,
according to Merrill Lynch analyst Jessica Reif Cohen, has run into a
long list of technical, marketing, installation and pricing problems.
One of its main outlets for distribution, the Crutchfield catalogue
and Web site, has stopped offering the service because Cablevision is
setting up a new installer network after problems with the old one,
said Dan Hodgson, senior vice president for business development at
Crutchfield in Charlottesville, Va.
Nonetheless, Voom continues to expand its channel lineup, which
stresses HDTV, and Cablevision signed a $740 million contract with
Lockheed Martin last month to develop new satellites for Voom.
"Why is Voom still on the table?" said Mario Gabelli, whose investment
firm has long held major stakes in Cablevision and who has long known
Charles Dolan. "Why is he trying to breath life into a project that
his board turned down? The stock today could be 10 points higher."
At mid-afternoon, Cablevision stock, which had jumped more than $3 in
a day following last month's regulatory filing, was down 36 cents per
share, or 1.5 percent, at $23.99.
"It's been clear for some months now that Jimmy Dolan would prefer to
see the business closed or sold," said Moffett, the analyst.
The Dolan family controls 75 percent of the company's voting shares,
with Charles controlling 41 percent directly. That means if he
persists in his backing of Voom despite board opposition, he could
seek to overhaul the board.
The 14-member board has become less predictable following the
appointment of several outside directors, including media investment
guru Steve Rattner of the Quadrangle Group, who is believed to
strongly oppose continuation of Voom.
Rattner did not return calls to his office yesterday. Thomas
Reifenheiser, an independent Cablevision director and former senior
executive at Chase Manhattan Bank, declined to comment when reached at
his home. Vice Admiral John Ryan, president of the State University of
New York Maritime College, also declined comment. Board member John
Tatta, a former Cablevision president and longtime ally of the Dolans,
was said to be in the hospital.
------------------------
business-l\
eadheadlines
Dolans duking it out over Voom
Father and son Cablevision bosses split on booting unprofitable
satellite TV venture
BY HARRY BERKOWITZ
STAFF WRITER
January 18, 2005, 3:11 PM EST
Charles and James Dolan, the father and son who control Cablevision
Systems Corp., appear headed for an unprecedented showdown over
whether to abandon their ailing Voom satellite TV venture.
Charles Dolan, the Cablevision chairman and founder, apparently wants
to keep the nationwide satellite service that was launched in October
2003 alive even though it is losing hundreds of millions of dollars
and attracting few subscribers.
James Dolan, chief executive of the New York metro area's biggest
cable TV service, who has promised investors that Cablevision would
stop going off on costly tangents as it has repeatedly in the past,
apparently wants to end the all-but-failed experiment. That means
dropping Voom and possibly selling its sole satellite.
The Cablevision board of directors was reportedly taking up the issue
Tuesday in the face of complaints from analysts and investors that
Voom, which had only 26,000 customers as of Sept. 30, threatens to
continue to drain company profits and hold down the stock price.
"It would be very difficult for the independent directors to approve
additional spending for Voom," said Craig Moffett, an analyst for the
investment firm Sanford C. Bernstein & Co. "At the same time, it would
take something close to a boardroom coup for Chuck Dolan to force out
the independent directors in order to renew investment in Voom. In
this environment of corporate governance, that's an awfully hard
scenario to imagine."
That seemed to threaten a stalemate unless Charles Dolan bowed to his
son's view.
"Despite public sentiment, the company still does not appear to have
decided the ultimate outcome, with the board seemingly divided, though
tilted slightly in favor of selling or shutting it down," UBS
investment analyst Aryeh Bourkoff told investors, adding that
"dissension could lead to a public battle." The board meeting was
first reported Tuesday in the Wall Street Journal.
Last year, Cablevision planned to spin off Voom, along with cable
channels including AMC and IFC, as a separate company, ending the
drain on Cablevision profits.
But after repeatedly delaying the spinoff, citing the need for board
and regulatory approval, last month Cablevision suspended the plan,
saying in a filing that it would seek "strategic alternatives" for
Voom, which analysts took to mean a sale or shutdown.
But for Charles Dolan, 78, Voom could be the last hurrah in an
illustrious and visionary career that included founding HBO and that
often ignored naysayers who later proved to be too pessimistic. He
planned to leave Cablevision to become chairman of the spinoff
company, with another son, Thomas, becoming its chief executive and
James, 49, taking over as Cablevision chairman.
Even following the regulatory filing, Charles and Thomas sent a memo
to employees saying that Voom "continues to function on a normal daily
basis" and that dropping the spinoff plan in no way "changes the
fundamental premise that hard work and good performance will leave our
business with anything less than a very bright future," according to
Satellite Business News, which was read parts of the memo.
The father and son expressed confidence, "especially during this time
of increased board oversight."
But Voom, which posted a loss of $75 million in the third quarter of
last year and burned through an estimated $477 million last year,
according to Merrill Lynch analyst Jessica Reif Cohen, has run into a
long list of technical, marketing, installation and pricing problems.
One of its main outlets for distribution, the Crutchfield catalogue
and Web site, has stopped offering the service because Cablevision is
setting up a new installer network after problems with the old one,
said Dan Hodgson, senior vice president for business development at
Crutchfield in Charlottesville, Va.
Nonetheless, Voom continues to expand its channel lineup, which
stresses HDTV, and Cablevision signed a $740 million contract with
Lockheed Martin last month to develop new satellites for Voom.
"Why is Voom still on the table?" said Mario Gabelli, whose investment
firm has long held major stakes in Cablevision and who has long known
Charles Dolan. "Why is he trying to breath life into a project that
his board turned down? The stock today could be 10 points higher."
At mid-afternoon, Cablevision stock, which had jumped more than $3 in
a day following last month's regulatory filing, was down 36 cents per
share, or 1.5 percent, at $23.99.
"It's been clear for some months now that Jimmy Dolan would prefer to
see the business closed or sold," said Moffett, the analyst.
The Dolan family controls 75 percent of the company's voting shares,
with Charles controlling 41 percent directly. That means if he
persists in his backing of Voom despite board opposition, he could
seek to overhaul the board.
The 14-member board has become less predictable following the
appointment of several outside directors, including media investment
guru Steve Rattner of the Quadrangle Group, who is believed to
strongly oppose continuation of Voom.
Rattner did not return calls to his office yesterday. Thomas
Reifenheiser, an independent Cablevision director and former senior
executive at Chase Manhattan Bank, declined to comment when reached at
his home. Vice Admiral John Ryan, president of the State University of
New York Maritime College, also declined comment. Board member John
Tatta, a former Cablevision president and longtime ally of the Dolans,
was said to be in the hospital.
------------------------
