Thread: FCC help for Dolan Unlikely

TheDeal.com
FCC help for Dolan unlikely
Monday April 4, 5:00 am ET
By Ron Orol in Washington

The Federal Communications Commission is unlikely to oppose Cablevision Systems Corp.'s proposed sale of a satellite to EchoStar Communications Corp., according to people familiar with the agency's position on a deal that has generated a bitter internal feud at the cable operator.

Cablevision founder and chairman Charles Dolan wants to buy the satellite for a satellite-TV subsidiary called Voom!, which he champions but which Cablevision wants to close. Cablevision agreed in January to sell the satellite to EchoStar for $200 million, prompting an FCC review of the sale. Dolan asked the FCC last week to block the sale to Echostar, arguing that the deal would stifle competition among broadcast-satellite providers.

Dolan's effort to revive Voom! puts him in conflict not only with Cablevision's board but also with his son, James, the company's CEO. The elder Dolan is trying to assemble the capital needed to turn Voom! into the country's third satellite-TV business, one that would compete against EchoStar's Dish network and News Corp.'s DirecTV.

But sources familiar with the FCC say it is unlikely to block the satellite sale to EchoStar. Larry Blosser, telecom attorney at DLA Piper Rudnick Gray Cary US LLP in Washington, said the agency has traditionally been reluctant to block similar satellite sales, and in any event is likely to view this deal as pro-competitive. Blosser said the agency is likely to argue that the sale will allow EchoStar to increase the number of high-definition channels it offers, making it a stronger competitor.

Others say the FCC will be reviewing the sale against the backdrop of major cable and satellite-TV deals. "There is increased consolidation in the cable and satellite TV industry," said Andrew Lipman, telecom and media partner at Swidler Berlin LLP in Washington, "and the agency will likely agree that it is in the public interest to permit EchoStar to expand and make itself a more robust competitor against these other larger companies."

Lipman referred to News Corp.'s $6.6 billion acquisition of DirecTV in 2003 and the potential acquisition of Adelphia Communications Corp. by Comcast Corp. and Time Warner Inc. as examples of EchoStar's powerful rivals. There is also speculation that financial buyers Kohlberg Kravis Roberts & Co. and Providence Equity Partners Inc. will make Cablevision a strategic addition to their cash bid for Adelphia.

Friedman Billings Ramsey & Co. analyst Alan Bezoza in New York said the FCC views the competition for video and television services as well-established enough to protect consumers from the threat of higher prices. Bezoza added that telecommunications companies also are expected to offer television services, making the market even more competitive. "I don't think anybody at the FCC is going to touch this," he said.

FCC International Bureau spokeswoman Jackie Ponti said the review, which began in February, is expected to take roughly six months, typical for transactions of its size. She said her bureau plans to coordinate its review of the deal with the agency's media and wireless bureaus, snd the general counsel's office. "It's not uncommon in these kinds of deals for different FCC bureaus to work together," she said.

Even if the elder Dolan fails at the FCC, he could persuade Cablevision's board to reverse itself and take the satellite off the table. Dolan, who has replaced several directors, is struggling to take control of the board in an effort to stop the satellite sale. On Thursday Dolan said he plans to introduce a proposal at an April 18 board meeting to reduce the number of directors to 12 from 15.

Dolan controls a majority of Cablevision's class-B shares, who have the right to nine of the board's 12 directors. Dolan had until Thursday to obtain funding to buy Voom! from Cablevision, or the cable conglomerate would shut it down. At press time on Friday, neither Cablevision nor Dolan had made any statements regarding Voom!; Cablevision and Dolan did not return calls.


http://biz.yahoo.com/deal/050404/fcc...kely.html?.v=1

"Even if the elder Dolan fails at the FCC, he could persuade Cablevision's board to reverse itself and take the satellite off the table."

This is an interesting thought, but wonder if E* would have been nice enough to allow this in their agreement. I smell a possible lawsuit in the works.

"But sources familiar with the FCC say it is unlikely to block the satellite sale to EchoStar."

The article is just speculation... I would take this with a very small grain of salt...

Originally Posted by amp

"Even if the elder Dolan fails at the FCC, he could persuade Cablevision's board to reverse itself and take the satellite off the table."

This is an interesting thought, but wonder if E* would have been nice enough to allow this in their agreement. I smell a possible lawsuit in the works.

Take a look, here is a link to the sales agreement.


http://www.sec.gov/Archives/edgar/da...6zex-10_45.htm

I have avoided posting my thoughts about if Voom will survive or not.
My gut feeling is Voom will survive one way or another... just how much money and if the Dolan's family relationship survives is the question.

The FCC is going to take 6 months to figure out what happens to Rainbow 1. Ok.

Everybody is forgetting that Hughes is building a couple more satellites for Voom.
Not sure of the delivery schedule... but... drag out the use of Rainbow 1 long enough for one of the new birds to be launched, then switch everyone over to the new bird.

How is that for a plan?

roland

The article is speculative and contradictory. EchoStar is already large. How would it be in the best interest to let it take on more DBS spectrum.

"Larry Blosser, telecom attorney at DLA Piper Rudnick Gray Cary US LLP in Washington, said the agency has traditionally been reluctant to block similar satellite sales, and in any event is likely to view this deal as pro-competitive. Blosser said the agency is likely to argue that the sale will allow EchoStar to increase the number of high-definition channels it offers, making it a stronger competitor."

This makes about as much sence as a $3 bill. But unfortunatly the FCC is government, so us voomers shouldn't hold our breath hoping for a favorable ruling by the FCC. I hat to say...

Originally Posted by bruce

Take a look, here is a link to the sales agreement.


http://www.sec.gov/Archives/edgar/da...6zex-10_45.htm

Wow! This is a full text! Not redacted!

Call me stupid, but don't these indemnification clauses, contained in 6.3 and 6.4, "hold harmless" both Rainbow DBS and EchoStar should either party breach the contract? 6.5 is titled "Indemnification Procedure" which I don't have time to read at present. Any contract lawyers out there?

6.3 Indemnification Provisions for Benefit of Buyer. Rainbow DBS shall indemnify, defend and hold Buyer and its Affiliates, and its and their respective officers, directors, employees, agents and shareholders, and its and their respective assigns, heirs, successors and legal representatives (collectively the “Buyer Group”) harmless from and against, any and all costs, losses, liabilities, damages, lawsuits, judgments, claims, actions, penalties, fines and expenses (including, without limitation, interest, penalties, reasonable attorney fees and all monies paid in the investigation, defense or settlement of any or all of the foregoing) (“Claims”) incurred by any member of the Buyer Group that arise out of, or are incurred in connection with, the breach or default of any representation, warranty, covenant or obligation of Rainbow DBS hereunder.

6.4 Indemnification Provisions for Benefit of Rainbow DBS. Buyer shall indemnify, defend and hold Rainbow DBS and its Affiliates, and its and their respective officers, directors, employees, agents and shareholders, and its and their respective assigns, heirs, successors and legal representatives (collectively the “Rainbow DBS Group”) harmless from and against, any and all Claims incurred by any member of the Rainbow DBS Group that arise out of, or are incurred in connection with, the breach or default of any representation, warranty, covenant or obligation of Buyer hereunder.