Source: http://www.newsday.com/business/ny-bzvoom4177303mar16,0,193027.story?coll=ny-business-headlines
All the cable king's men (NewsDay) 03.16.05
Will the trusted pals Charles Dolan put on board at Cablevision save Voom? Stay tuned...
BY HARRY BERKOWITZ AND MONTY PHAN
STAFF WRITERS
March 16, 2005
(NewsDay) If anyone at Cablevision - or in the Dolan family - had forgotten how deep chairman Charles Dolan's roots go in the cable industry or how intricate his ties are, his stunning shake-up of the company's board of directors this month had to jolt their memories.
And his hand-picked choices for the board may give hints as to how the new directors will help shape the future of strife-torn Cablevision Systems Corp., including the fate of his chief executive son, James.
Just look at the lineup.
One new director is known as the godfather of the cable TV industry, relentlessly negotiating complex deals, piecing together and then selling the nation's biggest cable company, and rescuing the media empires of Ted Turner and Rupert Murdoch.
Another ran Time Warner's HBO, the pioneering cable service that Dolan had dreamed up in the face of huge obstacles, and was CEO of Viacom when it sold Madison Square Garden to Cablevision.
A third is a cable pioneer who founded his own cable company in 1973, the same year as Cablevision. He put two family members on his own board of directors - not unlike Dolan.
And a fourth teamed up with Dolan to confound skeptics in buying Madison Square Garden, the Knicks and Rangers for $1.1 billion, and then boosting their value.
Every one of them has memories of the kind of corporate adventures and tortures that Dolan is enduring as the 78-year-old Cablevision founder tries to reclaim the entrepreneurial spirit that has characterized his long career.
"None of these guys would have come in thinking Chuck's crazy, because people have thought he is crazy before, and he turned out to be right," said Paul Maxwell, who owns the publishing and research company Media Business Corp.
Dolan, long known as a visionary and a tough negotiator, this month ousted three directors and replaced them with four long-time associates after the old board, including James Dolan, rejected his desire to stick with a high-definition satellite-TV service called Voom that drained Cablevision of $1.4 billion in start-up losses. Dolan also added a fifth board member, Brian Sweeney, a son-in-law who works at Cablevision.
Some Wall Street analysts and corporate governance champions blasted the shake-up, saying Dolan had packed the board. "Anybody who would agree to go on to this board under these circumstances is by definition a yes-man," said Nell Minow, editor of The Corporate Library, a research group based in Portland, Maine.
But others said some of the new directors may be valuable in helping maneuver the nation's sixth-biggest cable company through various perils and opportunities without fully bowing to Dolan's visions or getting caught up in the bitter family feud.
"He knows I like his whole family," said newly named director Rand Araskog, 73, a former head of ITT, which was partners with Cablevision in the Garden. "I'm pleased he asked me. I've made very clear to him that I'm not interested in getting involved in a family rift."
While corporate governance activists said directors must be aware of the dangers of approving risky actions that could lead to personal liability for them, Araskog said, "I see the role as a director very clearly as a representative of all shareholders, but I also see it as doing my very best to do what's right."
The other new outside board members are John Malone, 64, chairman of Liberty Media and former chairman of Colorado-based cable giant Tele-Communications Inc.; Frank Biondi Jr., 60, now a media venture capitalist, who over the years helped develop and then was ousted as CEO at HBO, Viacom and Universal Pictures; and cable pioneer Leonard Tow, 76, who was CEO of Century Communications until Adelphia Communications bought it.
Bob Gutkowski, who was president of Madison Square Garden when Viacom owned it but left once Cablevision and ITT took over, said Dolan put the four on the board for their "intellectual capital" and not because they're yes-men.
"Certainly, Frank and John, I think, have kept their finger on the pulse of what's going on in the television industry, both domestically and internationally," said Gutkowski, head of Criterion Sports and Entertainment.
Malone said Monday that his Liberty Media had declined to invest in a satellite service like Voom last year and that Voom's advantage in offering many high-definition channels was vanishing in the face of competitors' gains.
"I joined the Cablevision board because Chuck Dolan asked me to and he's been a friend for 40 years," Malone said in a Liberty Media earnings conference call. "And it seemed like I might be helpful to him in terms of settling things down for him."
In an interview, Tow said, "Voom is Chuck Dolan's project and he believes in it, and to the extent he wants to pursue it, God bless him."
Amid talk of possible sales of pieces of Cablevision, including its cable-TV service with 3 million subscribers and cable channels that include AMC, the crafty and often ruthless Malone's advice could be especially valuable.
Malone, once compared to Darth Vader by then-U.S. Sen. Al Gore, transformed the ailing TCI into a giant through $3 billion in acquisitions, although it never shook off a reputation as a shoddy, no-frills cable operator. He rules over cable channels Starz, Encore and QVC plus has a 50-percent stake in Discovery Channels, which is being spun off. He has a history in satellite TV as well.
In addition, when Ted Turner's cable channel empire, including CNN, was teetering, Malone organized cable leaders to fashion a rescue package.
Malone's ties with Dolan go deep. TCI sold cable systems with 820,000 subscribers to Cablevision in 1997, cementing its control on Long Island. Malone sold the rest of TCI to AT&T for $54 billion in 1999.
"The hallmark of a Malone deal is that it is so complicated that only he truly understands it," said media analyst Larry Gerbrandt, adding that "there is no finer strategic mind in the industry."
Last week, Cablevision's new 15-member board, including six independent directors and three Dolan sons, gave Charles Dolan until the end of this month to find a way to take Voom off Cablevision's hands. At the board's insistence, he has put up $10 million of his own cash and stock to help fund Voom this month.
Dolan also has long ties to Biondi, whose involvement in cable TV dates back nearly three decades and who is now managing director of media equity fund Waterview Advisors and an adept student of the new technologies and services of the cable TV industry.
In an interview in 2000, Biondi recalled when Time Inc. squeezed out Dolan, who had started up the pay-TV service Home Box Office with Time Inc.'s backing in the face of resistance from movie studio executives and theater owners.
"Part of what Chuck got as a going away present was the right to buy the major [cable] cluster in Long Island that Time was never going to build," Biondi recalled. "Chuck proved everybody wrong," he added, by turning the franchises into Cablevision.
After helping HBO grow as head of program planning and then CEO, Biondi became CEO at Viacom, where he stressed in-depth analysis in contrast to chairman Sumner Redstone's gut instincts.
He crossed paths with Dolan again in the sale of MSG and its sports teams. Then in 1996, Redstone ousted Biondi, explaining later his style was not aggressive or passionate enough for Viacom after it acquired Paramount Pictures and Blockbuster.
"Between Frank Biondi and John Malone, they bring a 360-degree view of Cablevision and all of the things that surround it," said a media executive close to Dolan. "It doesn't matter if it's programming, satellite or cable distribution."
It is cable distribution that led to Tow's fortune, having built Connecticut-based Century Communications Corp. from the ground up before selling it in 1999 in a multibillion dollar deal. And much like Dolan, Tow believed in family control.
At Century, where Tow was chairman, his wife, Claire, headed human resources and his son, Andrew, headed the cable TV division before overseeing operations in Australia. Both were also on the board.
"Leonard Tow is a pure loyalist," said a former media executive close to Dolan. "He will feel he owes Chuck support and will find a way to show it."
Araskog, the former chairman of ITT, which Starwood Lodging acquired in 1997 after ITT fended off Hilton, may bring insight that helps Cablevision's fight to block a proposed Jets stadium for the West Side of Manhattan, which is seen as potential competition for Madison Square Garden.
Araskog and Dolan share a belief that traditional retirement ages are not for them. "I don't believe in retirement," Araskog said. "Maybe I will when I'm 80, but I don't believe in it right now."
The Voom story
October 2003: Cablevision launches Voom satellite TV service; plans to split it off.
May 2004: Problems emerge in attracting customers as Voom losses mount.
September 2004: Cablevision says it will delay Voom's spin-off.
November 2004: Voom reveals it lost more customers than it attracted in the summer amid operational and marketing problems.
December 2004: Board, backed by chief executive James Dolan, abandons spin-off and defies chairman Charles Dolan by deciding to sell or shut Voom.
January 2005: After a face-off pitting Charles Dolan against his son and a majority of Cablevision's board, the company agrees to ditch Voom and sell its sole satellite to EchoStar Communications for $200 million.
Feb. 10: Cablevision signs letter of intent to give rest of Voom to Charles Dolan and son Thomas Dolan if they arrange financing.
Feb. 28: Cablevision says it has no definitive agreement with the Dolans and will shut Voom by the end of March. The Dolans say they have financing and want a deal.
March 2: Voom.com Web site says service ends at the end of month, but VoomLLC.com site, established by Charles Dolan and son Tom Dolan, proclaims "Voom Still Delivers."
March 3: Charles Dolan ousts three directors and picks five new ones, giving him a theoretical 8-7 edge.
March 8: New board gives Charles and Tom Dolan to month's end to come up with an "alternative transaction" that prevents Voom's shutdown.
March 10: Charles Dolan puts up $10 million of his own fortune to help keep Voom running.
New on board
The new members of Cablevision's board of directors:
John Malone, chairman of Liberty Media, owner of Encore and Starz. He sold cable giant TCI to AT&T.
Frank Biondi Jr., former CEO of Viacom who once ran Time Warner's Home Box Office.
Rand Araskog, former head of ITT, which had been partners with Cablevision in Madison Square Garden.
Leonard Tow, former chief executive of Citizens Communication, a telecommunications company in Connecticut that was sold to Adelphia.
Brian Sweeney, a senior vice president at Cablevision's online and digital TV unit and a son-in-law of Charles Dolan.
QUOTES:
1) '... People have thought he is crazy before, and he turned out to be right.' - Paul Maxwell of Media Business Corp., discussing Charles Dolan
2) 'I joined ... because Chuck Dolan asked me to and he's been a friend for 40 years.' - John Malone
3) 'Chuck proved everybody wrong.' - Frank Biondi Jr., on Charles Dolan's buying Time Inc.'s cable franchises and turning them into Cablevision
4) 'I've made very clear to him that I'm not interested in getting involved in a family rift.' - Rand Araskog
5) 'Voom is Chuck Dolan's project and he believes in it.'
Copyright © 2005, Newsday, Inc.
All the cable king's men (NewsDay) 03.16.05
Will the trusted pals Charles Dolan put on board at Cablevision save Voom? Stay tuned...
BY HARRY BERKOWITZ AND MONTY PHAN
STAFF WRITERS
March 16, 2005
(NewsDay) If anyone at Cablevision - or in the Dolan family - had forgotten how deep chairman Charles Dolan's roots go in the cable industry or how intricate his ties are, his stunning shake-up of the company's board of directors this month had to jolt their memories.
And his hand-picked choices for the board may give hints as to how the new directors will help shape the future of strife-torn Cablevision Systems Corp., including the fate of his chief executive son, James.
Just look at the lineup.
One new director is known as the godfather of the cable TV industry, relentlessly negotiating complex deals, piecing together and then selling the nation's biggest cable company, and rescuing the media empires of Ted Turner and Rupert Murdoch.
Another ran Time Warner's HBO, the pioneering cable service that Dolan had dreamed up in the face of huge obstacles, and was CEO of Viacom when it sold Madison Square Garden to Cablevision.
A third is a cable pioneer who founded his own cable company in 1973, the same year as Cablevision. He put two family members on his own board of directors - not unlike Dolan.
And a fourth teamed up with Dolan to confound skeptics in buying Madison Square Garden, the Knicks and Rangers for $1.1 billion, and then boosting their value.
Every one of them has memories of the kind of corporate adventures and tortures that Dolan is enduring as the 78-year-old Cablevision founder tries to reclaim the entrepreneurial spirit that has characterized his long career.
"None of these guys would have come in thinking Chuck's crazy, because people have thought he is crazy before, and he turned out to be right," said Paul Maxwell, who owns the publishing and research company Media Business Corp.
Dolan, long known as a visionary and a tough negotiator, this month ousted three directors and replaced them with four long-time associates after the old board, including James Dolan, rejected his desire to stick with a high-definition satellite-TV service called Voom that drained Cablevision of $1.4 billion in start-up losses. Dolan also added a fifth board member, Brian Sweeney, a son-in-law who works at Cablevision.
Some Wall Street analysts and corporate governance champions blasted the shake-up, saying Dolan had packed the board. "Anybody who would agree to go on to this board under these circumstances is by definition a yes-man," said Nell Minow, editor of The Corporate Library, a research group based in Portland, Maine.
But others said some of the new directors may be valuable in helping maneuver the nation's sixth-biggest cable company through various perils and opportunities without fully bowing to Dolan's visions or getting caught up in the bitter family feud.
"He knows I like his whole family," said newly named director Rand Araskog, 73, a former head of ITT, which was partners with Cablevision in the Garden. "I'm pleased he asked me. I've made very clear to him that I'm not interested in getting involved in a family rift."
While corporate governance activists said directors must be aware of the dangers of approving risky actions that could lead to personal liability for them, Araskog said, "I see the role as a director very clearly as a representative of all shareholders, but I also see it as doing my very best to do what's right."
The other new outside board members are John Malone, 64, chairman of Liberty Media and former chairman of Colorado-based cable giant Tele-Communications Inc.; Frank Biondi Jr., 60, now a media venture capitalist, who over the years helped develop and then was ousted as CEO at HBO, Viacom and Universal Pictures; and cable pioneer Leonard Tow, 76, who was CEO of Century Communications until Adelphia Communications bought it.
Bob Gutkowski, who was president of Madison Square Garden when Viacom owned it but left once Cablevision and ITT took over, said Dolan put the four on the board for their "intellectual capital" and not because they're yes-men.
"Certainly, Frank and John, I think, have kept their finger on the pulse of what's going on in the television industry, both domestically and internationally," said Gutkowski, head of Criterion Sports and Entertainment.
Malone said Monday that his Liberty Media had declined to invest in a satellite service like Voom last year and that Voom's advantage in offering many high-definition channels was vanishing in the face of competitors' gains.
"I joined the Cablevision board because Chuck Dolan asked me to and he's been a friend for 40 years," Malone said in a Liberty Media earnings conference call. "And it seemed like I might be helpful to him in terms of settling things down for him."
In an interview, Tow said, "Voom is Chuck Dolan's project and he believes in it, and to the extent he wants to pursue it, God bless him."
Amid talk of possible sales of pieces of Cablevision, including its cable-TV service with 3 million subscribers and cable channels that include AMC, the crafty and often ruthless Malone's advice could be especially valuable.
Malone, once compared to Darth Vader by then-U.S. Sen. Al Gore, transformed the ailing TCI into a giant through $3 billion in acquisitions, although it never shook off a reputation as a shoddy, no-frills cable operator. He rules over cable channels Starz, Encore and QVC plus has a 50-percent stake in Discovery Channels, which is being spun off. He has a history in satellite TV as well.
In addition, when Ted Turner's cable channel empire, including CNN, was teetering, Malone organized cable leaders to fashion a rescue package.
Malone's ties with Dolan go deep. TCI sold cable systems with 820,000 subscribers to Cablevision in 1997, cementing its control on Long Island. Malone sold the rest of TCI to AT&T for $54 billion in 1999.
"The hallmark of a Malone deal is that it is so complicated that only he truly understands it," said media analyst Larry Gerbrandt, adding that "there is no finer strategic mind in the industry."
Last week, Cablevision's new 15-member board, including six independent directors and three Dolan sons, gave Charles Dolan until the end of this month to find a way to take Voom off Cablevision's hands. At the board's insistence, he has put up $10 million of his own cash and stock to help fund Voom this month.
Dolan also has long ties to Biondi, whose involvement in cable TV dates back nearly three decades and who is now managing director of media equity fund Waterview Advisors and an adept student of the new technologies and services of the cable TV industry.
In an interview in 2000, Biondi recalled when Time Inc. squeezed out Dolan, who had started up the pay-TV service Home Box Office with Time Inc.'s backing in the face of resistance from movie studio executives and theater owners.
"Part of what Chuck got as a going away present was the right to buy the major [cable] cluster in Long Island that Time was never going to build," Biondi recalled. "Chuck proved everybody wrong," he added, by turning the franchises into Cablevision.
After helping HBO grow as head of program planning and then CEO, Biondi became CEO at Viacom, where he stressed in-depth analysis in contrast to chairman Sumner Redstone's gut instincts.
He crossed paths with Dolan again in the sale of MSG and its sports teams. Then in 1996, Redstone ousted Biondi, explaining later his style was not aggressive or passionate enough for Viacom after it acquired Paramount Pictures and Blockbuster.
"Between Frank Biondi and John Malone, they bring a 360-degree view of Cablevision and all of the things that surround it," said a media executive close to Dolan. "It doesn't matter if it's programming, satellite or cable distribution."
It is cable distribution that led to Tow's fortune, having built Connecticut-based Century Communications Corp. from the ground up before selling it in 1999 in a multibillion dollar deal. And much like Dolan, Tow believed in family control.
At Century, where Tow was chairman, his wife, Claire, headed human resources and his son, Andrew, headed the cable TV division before overseeing operations in Australia. Both were also on the board.
"Leonard Tow is a pure loyalist," said a former media executive close to Dolan. "He will feel he owes Chuck support and will find a way to show it."
Araskog, the former chairman of ITT, which Starwood Lodging acquired in 1997 after ITT fended off Hilton, may bring insight that helps Cablevision's fight to block a proposed Jets stadium for the West Side of Manhattan, which is seen as potential competition for Madison Square Garden.
Araskog and Dolan share a belief that traditional retirement ages are not for them. "I don't believe in retirement," Araskog said. "Maybe I will when I'm 80, but I don't believe in it right now."
The Voom story
October 2003: Cablevision launches Voom satellite TV service; plans to split it off.
May 2004: Problems emerge in attracting customers as Voom losses mount.
September 2004: Cablevision says it will delay Voom's spin-off.
November 2004: Voom reveals it lost more customers than it attracted in the summer amid operational and marketing problems.
December 2004: Board, backed by chief executive James Dolan, abandons spin-off and defies chairman Charles Dolan by deciding to sell or shut Voom.
January 2005: After a face-off pitting Charles Dolan against his son and a majority of Cablevision's board, the company agrees to ditch Voom and sell its sole satellite to EchoStar Communications for $200 million.
Feb. 10: Cablevision signs letter of intent to give rest of Voom to Charles Dolan and son Thomas Dolan if they arrange financing.
Feb. 28: Cablevision says it has no definitive agreement with the Dolans and will shut Voom by the end of March. The Dolans say they have financing and want a deal.
March 2: Voom.com Web site says service ends at the end of month, but VoomLLC.com site, established by Charles Dolan and son Tom Dolan, proclaims "Voom Still Delivers."
March 3: Charles Dolan ousts three directors and picks five new ones, giving him a theoretical 8-7 edge.
March 8: New board gives Charles and Tom Dolan to month's end to come up with an "alternative transaction" that prevents Voom's shutdown.
March 10: Charles Dolan puts up $10 million of his own fortune to help keep Voom running.
New on board
The new members of Cablevision's board of directors:
John Malone, chairman of Liberty Media, owner of Encore and Starz. He sold cable giant TCI to AT&T.
Frank Biondi Jr., former CEO of Viacom who once ran Time Warner's Home Box Office.
Rand Araskog, former head of ITT, which had been partners with Cablevision in Madison Square Garden.
Leonard Tow, former chief executive of Citizens Communication, a telecommunications company in Connecticut that was sold to Adelphia.
Brian Sweeney, a senior vice president at Cablevision's online and digital TV unit and a son-in-law of Charles Dolan.
QUOTES:
1) '... People have thought he is crazy before, and he turned out to be right.' - Paul Maxwell of Media Business Corp., discussing Charles Dolan
2) 'I joined ... because Chuck Dolan asked me to and he's been a friend for 40 years.' - John Malone
3) 'Chuck proved everybody wrong.' - Frank Biondi Jr., on Charles Dolan's buying Time Inc.'s cable franchises and turning them into Cablevision
4) 'I've made very clear to him that I'm not interested in getting involved in a family rift.' - Rand Araskog
5) 'Voom is Chuck Dolan's project and he believes in it.'
Copyright © 2005, Newsday, Inc.
