[opendtv] News: Amid Board Upheaval, Cablevision Delays Shutdown of Unit
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
- Date: Fri, 4 Mar 2005 07:47:38 -0500
http://www.nytimes.com/2005/03/04/business/media/04cable.html?th
Amid Board Upheaval, Cablevision Delays Shutdown of Unit
By NAT IVES and GERALDINE FABRIKANT
Published: March 4, 2005
The boardroom and family battles at Cablevision Systems took a new
turn yesterday as the company said it would delay shutting the Voom
satellite television service to give Charles F. Dolan, the
Cablevision chairman, more time to assemble a deal to buy the
business.
Another twist emerged later in the day, when an independent committee
of directors accused Mr. Dolan of expanding Voom through his newly
created Web site in violation of his agreement with Cablevision. A
letter from the committee said it was "imperative that the expansion
of the business stop immediately."
The independent board members may have partly been taking steps to
protect themselves from possible shareholder suits if Cablevision
continued to sell the service. As recently as Monday, Cablevision had
declared negotiations over, saying it planned to close Voom within 30
days.
Even before the letter went out, Mr. Dolan appeared to have taken
down the Web site that Cablevision said was taking orders for new
customers. Mr. Dolan could not be reached for comment.
The company, which made its disclosures in filings with the
Securities and Exchange Commission, said Mr. Dolan was expected to
update the board on his efforts to buy Voom, at a meeting scheduled
for Monday.
The reprieve for Voom came one day after Mr. Dolan named four new
Cablevision directors in a move that seemed intended to shore up his
support on the board. Mr. Dolan holds shares that represent 75
percent of Cablevision's vote, but the battle over Voom has pitted
him against some directors, including one of his sons, James L.
Dolan, the chief executive at Cablevision. Another son, Thomas C.
Dolan, the executive vice president, supports his father's attempts
to keep Voom alive.
The new directors are John C. Malone, chairman of Liberty Media;
Frank J. Biondi Jr., the former chief of Viacom and Universal
Studios; Dr. Leonard Tow, the former chief executive of Citizens
Communications; and Rand Araskog, the former chief executive of the
ITT Corporation. Cablevision acquired Madison Square Garden from ITT
when it was led by Mr. Araskog.
Mr. Dolan also said he would ask the board to expand by one seat to
accommodate Brian Sweeney, senior vice president for e-media at
Cablevision and Mr. Dolan's son-in-law. Wall Street was unhappy about
the reconfiguration of the board. "We regard this latest development
as highly problematic as Mr. Dolan has essentially reshaped the board
to sustain the option of acquiring Voom," said Jessica Reif Cohen, a
Merrill Lynch analyst, in a research note to investors.
"The exiting directors had voted against funding the struggling
satellite service. In this era of corporate governance, Mr. Dolan's
actions are remarkable for a public company, marked by the nomination
of another family member to the board."
Cablevision stock fell $1.59, or 5.3 percent, to $28.65 in regular
trading yesterday, and lost another 20 cents in after-hours trading.
Aryeh B. Bourkoff, a cable and satellite analyst at UBS Investment
Research, said Mr. Dolan had clearly reasserted himself as the owner
of Cablevision. "The changeover of the board strengthens Chuck
Dolan's position and marks the resurrection of the Voom venture," he
said.
The structure of a potentially revived Voom business remains
uncertain, said Mr. Bourkoff, who has a neutral rating on Cablevision
stock and bonds.
In its filing, Cablevision also said that the S.E.C. was conducting
an informal inquiry into trading in its securities from Nov. 1
through Jan. 20, the period leading up to Cablevision's Jan. 20 sale
of the Voom satellite to EchoStar Communications for $200 million.
The inquiry involves public statements Cablevision made in December,
when it dropped plans to spin off Voom and several cable networks
into a company called Rainbow Media Enterprises, and in January, when
it announced the satellite sale to EchoStar. Cablevision said it
learned of the inquiry on Monday. Mr. Dolan said in February that he
would form a company to buy the remaining assets of Voom.
Cablevision started Voom in 2003 with the intention of attracting
subscribers by providing more high-definition television programming
than other satellite or cable operators. Voom acquired relatively few
subscribers, however, as demand for high-definition programming
lagged expectations and undermined the value of Voom's specialty.
Despite the turmoil and uncertainty, Mr. Bourkoff said the new board
members could improve the outlook at Cablevision. "The important
thing to keep in mind is that Chuck Dolan has certainly brought some
industry expertise to the board," he said. "But obviously, they will
be much more aligned with Chuck Dolan."
Charles Schueler, a spokesman for Cablevision in Bethpage, N.Y.,
declined to elaborate on the filings or make executives available for
comment.
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