Cablevision Chairman To Use Cash, Stock To Fund Voom

[joep]

http://money.iwon.com/jsp/nw/nwdt_r...050310&date=20050310&alias=/alias/money/cm/nw

Cablevision Chairman To Use Cash, Stock To Fund Voom

Thursday March 10, 11:26 AM EST


WASHINGTON (Dow Jones)--Cablevision Systems Corp. (CVC) Chairman Charles Dolan on Thursday said he plans to use his own cash and stock in the company to fund the operations of the Voom satellite-television service until March 31, according to an amended Schedule 13D filed with the Securities and Exchange Commission.

On Tuesday, Charles Dolan and his son, Thomas Dolan, entered into an agreement with Cablevision under which Charles Dolan will fund costs of the company's Rainbow DBS business above the costs that would have been incurred under a shutdown budget.

Under the agreement, Dolan will deposit with Cablevision cash and shares of Class A common stock or Class B common stock to fund the costs. The cash and shares will have a market value of $10 million, the filing said.



As reported, the agreement allows Rainbow DBS to remain in operation and continue providing its Voom service to subscribers while Charles and Thomas Dolan seek to arrange an alternate transaction that would avoid a shutdown of Rainbow DBS.

The withdrawals will be made first from cash amounts, then from any shares of Class A common stock and finally from any shares of Class B common stock that may have been deposited, the filing said.

Upon the termination of the DBS agreement, all cash and stock deposited by Dolan but not used to fund costs of the Rainbow DBS business will be returned, the filing said.

Cablevision Systems is an entertainment, media and telecommunications company.

-By Brian Coyle, Dow Jones Newswires; 202-862-3545


Dow Jones Newswires
03-10-05 1126ET

 

[Ilya]

...Charles Dolan on Thursday said he plans to use his own cash and stock in the company to fund the operations of the Voom satellite-television service until March 31... The cash and shares will have a market value of $10 million, the filing said.

In other words, Chuck bets $10 million that VOOM will survive!

 

[vurbano]

nothing really new here. From the SEC filing it was known that DOlan would have to pay for anything above shut down costs.

 

[Jamey K]

In other words, Chuck bets $10 million that VOOM will survive!

That's the way I read it.

 

[roachxp]

Well if he bet 10million that must be the money from the Feb. 22 stock sale.
Link
And according to the NYSE someone sold 1.2 million shares today. :clap

Long live VOOM

 

[HiDefGuy]

I sincerely hope Charles succeeds, to throw that kind of money into something deserves a positive return. Go Chuck!

 

[vurbano]

But it costs 75 million a quarter to run Voom? Is that the number?

 

[Bruce]

But it costs 75 million a quarter to run Voom? Is that the number?

More or less, yep, but this money is only to keep it up til Mar.31 beyond the shut down costs.

 

[jeslevine]

why would Ergen want Voom to survive?

But it costs 75 million a quarter to run Voom? Is that the number?

I hope Voom makes it?

 

[mike123abc]

Voom has an estimated shutdown cost of around 100million cash and 250 or so million in writedowns/writeoffs. A lot of VOOM "losses" have not been cash losses but writedown of the value of assets like paying for a satellite and uplink center then having to sell for less to Echostar.

Figuring out the "bleed" of VOOM is hard since a lot of the bleeding is writing down money spent before that bought "assets" that are no longer of any value.

 

[shell5058]

sticky?

 

[mark franke]

Charles Dolans cash

Folks
I just checked Forbes web site. In 2004 Chuck Dolan was listed as having worth of $1.8 Billion. Thats Billion with a "B" If he can't get this done I would be surprised. I also think, with better marketing, Voom will do great.This guy founded HBO and is very savvy. I love wathching this soap opera online.
Love my VOOM
Mark Franke MD

 

[joep]

Dolan funds Cablevision unit

Dolan funds Cablevision unit

http://www.thedeal.com/NASApp/cs/Co...hpa&c=TDDArticle&cid=1110412202230&p=M4YD5AR1

Cablevision Systems Corp. chairman Chuck Dolan is putting his money where his heart is through a funding mechanism designed both to sustain the company's direct broadcast satellite operation and to assuage corporate governance concerns about a handful of new directors.

The mechanism, detailed in a regulatory filing Thursday, March 10, kicked in Wednesday with Dolan's delivering $10 million in "cash and/or shares" of the company's Class A common stock or Class B supervoting shares. Dolan's personal deposit to Cablevision is earmarked for its Rainbow DBS unit, which provides the Voom high-definition television service 46,000 subscribers now receive.

On Tuesday, reversing an earlier decision, Cablevision's board agreed to give Dolan and his middle son, Tom, until the end of the month to "arrange an alternate transaction" to avoid shuttering Rainbow DBS. As part of that agreement, Dolan committed himself to funding all DBS costs above those incurred had the board acted on its Feb. 28 decision to "close down the Voom business."

Dolan responded to the Feb. 28 decision two days later by re-stacking the board in a manner that not only cast out DBS detractors William J. Bell, Sheila A. Mahony and Steven Ratter but replaced them with an entrepreneurial-sensitive crew of media heavyweights. New directors Rand Araskog, Frank Biondi Jr., John Malone and Leonard Tow participated in their first directors' meeting Monday, where they were joined by another new director, Dolan son-in-law Brian Sweeney, who had just been elected to fill a board vacancy.

Many feared the recomposed board would acquiesce to Dolan's DBS obsession, perhaps even agreeing to continue funding a 16-month-old service that had already plowed through $1.4 billion in startup costs. That Cablevision had no comment after the Monday directors' meeting did little to placate those fears.

Thursday's filing revealed them to be misplaced, however, as Fulcrum Global Partners LLC analyst Richard Greenfield noted in a Cablevision update: "The new board of directors is not willing to place shareholder capital at risk and is forcing Chuck Dolan to pursue his entrepreneurial ambitions to develop Voom with his own capital."

Equally significant are the filing's implications about a Cablevision sale. Dolan has an economic interest of 14.5% in the publicly traded company and, thanks to supervoting shares, a controlling interest of 75.5%.

Observers have been speculating for weeks that Dolan's so-called beam dream might precipitate an outright sale of the New York-centric cable company, the country's sixth largest, most likely to industry leader Comcast Corp. or to runner-up Time Warner Inc. That possibility seems even greater now that Dolan is financing Rainbow DBS' survival on what the filing called "a daily basis."

As analyst Greenfield put it: "While selling stock on a reactionary basis (as bills come in) will keep Voom going, we think it is very tax-inefficient and does not maximize the value per share. In turn, we believe Mr. Dolan is likely preparing (or will shortly come to the conclusion) that the only way to fund Voom long-term is to put [Cablevision] up for sale."

A Cablevision spokeswoman wouldn't say if Dolan's $10 million deposit consisted of cash, stock or a combination. The filing did specify a priority, however, with the deposit's cash component to be drawn down first, followed by the "withdrawing and canceling" of Class A common stock and then Class B supervoting shares.

The funding agreement also permits Dolan to dismantle the mechanism and recoup what remains of his deposit any time before its March 31 termination date. Cablevision can rescind, too, should there be a breach of terms.

 

[remmy]

But it costs 75 million a quarter to run Voom? Is that the number?

If this is true. Then if you do the math and use very modest numbers. Voom will need to have 500,000 subs just to cover the cost of operations for a quarter before the turn a profit. This is figuring that the subs only have the $49.99 package. Again using very modest numbers. $75 million seems rather light though when others have talked that it takes 100's of millions to run Voom a year?

 

[vurbano]

Dolan renegotiating E* deal

Dolan puts up $10 million to keep Voom running

BY HARRY BERKOWITZ
STAFF WRITER

March 10, 2005, 2:29 PM EST

Cablevision chairman Charles Dolan is personally putting up $10 million in cash and company stock to help keep Voom running this month while he tries to rescue the satellite TV service that has split the board and his family.

Yesterday's disclosure of the amount provides more evidence of the great lengths to which Dolan, 78, the billionaire founder who has a controlling stake in Cablevision Systems Corp., is prepared to go to pull Voom back from near-death.

And it indicates that an overhauled board of directors is not easily giving in to Dolan's demands. "The new board of directors is not willing to place shareholder capital at risk and is forcing Chuck Dolan to pursue his entrepreneuial ambitions to develop Voom with his own capital," Fulcrum Global Partners analyst Richard Greenfield told investors.

On Tuesday, the new board suspended the shutdown of Voom until March 31 to give Dolan time to come up with a way to rescue it. He agreed to fund the extra costs of delaying a shutdown.

Dolan is racing to negotiate a deal with EchoStar Communications that would alter the one his son, James, the Cablevision chief executive, signed in January to sell Voom's sole satellite for $200 million.

Yesterday's regulatory filing also gives another peek into how the company is trying to avoid a repeat of the showdown in which Dolan created a new renegade Web site for Voom last week after Cablevision ordered the old one shut.

According to the filing, the agreement signed Tuesday with Dolan to suspend the shutdown of Jericho-based Voom stresses that neither he nor his son Tom, the Voom chief executive, will take actions or issue orders to override Cablevision management. Cablevision has re-activated the Web site.

The filing said Dolan owns 37 million shares, or 14.5 percent of the total shares, worth nearly $1.1 billion. Voom had $660 million in 2004 losses and analysts speculate that Dolan may sell the company to finance future Voom losses.

On Feb. 28, a majority of the old board, including James, had ordered that Voom be shut, leading Dolan to oust three directors and name five new ones, expanding the size by one to 15, including nine directly placed on the board by Dolan.

Yesterday's filing also revealed that the fifth new director, Dolan son-in-law Brian Sweeney, had taken his place on the board after the directors elected by Dolan voted him in. Originally, Cablevision said the full board, which includes six independent directors, would have to vote to expand its size to make room for Sweeney. But yesterday it said that was not necessary because there was a vacancy among the Dolan-elected board seats.

 

[James Long]

If this is true. Then if you do the math and use very modest numbers. Voom will need to have 500,000 subs just to cover the cost of operations for a quarter before the turn a profit. This is figuring that the subs only have the $49.99 package. Again using very modest numbers. $75 million seems rather light though when others have talked that it takes 100's of millions to run Voom a year?

Last year Cablevision reported operating losses of $211.6 million for the first 9 months (average $70.5 million - actual reported for 3Q04 was $75 million). The 4th quarter had about $95 million in operating losses (not to mention the impairment of $246 million and writeoff of $108.9 million that Cablevision offloaded on Voom on the last quarter).

As long as Voom is giving away hundreds of dollars of equipment expect the operating losses to grow as they add customers. Revenues for 3Q04 and 4Q04 were about the same at $5 million. Revenues will go up with more customers, but if 26,000 generated $5 million in a quarter they will need 500,000 customers to generate $95 million to cover a quarter's operating loss.

JL

 

[cfarm]

As long as Voom is giving away hundreds of dollars of equipment expect the operating losses to grow as they add customers. Revenues for 3Q04 and 4Q04 were about the same at $5 million. Revenues will go up with more customers, but if 26,000 generated $5 million in a quarter they will need 500,000 customers to generate $95 million to cover a quarter's operating loss.

JL

Less than 2 year old DBS startup. Is anyone with half a brain actually expecting profitability at this stage? Did everyone just ignore the $2-$5B estimates from 3 years ago? CVC has only spent $1.4B according to the most recent figures.

In a nutshell, where's the mystery?

Let's not forget Echostar and DirecTV give away free equipment every day as well. It's the price you pay to compete for subs.

 

[cfarm]

Dolan puts up $10 million to keep Voom running

BY HARRY BERKOWITZ
STAFF WRITER

March 10, 2005, 2:29 PM EST

.....
And it indicates that an overhauled board of directors is not easily giving in to Dolan's demands. "The new board of directors is not willing to place shareholder capital at risk and is forcing Chuck Dolan to pursue his entrepreneuial ambitions to develop Voom with his own capital," Fulcrum Global Partners analyst Richard Greenfield told investors.
.

Pretty thick on the speculation there, don't you think?

They could have said they were moving forward with the shutdown on one extreme or they could have reversed the process entirely. This is somewhere in the middle but it gets that slant from the media?

 

[James Long]

Is anyone with half a brain actually expecting profitability at this stage?

It isn't that it isn't profitable, it is that it is SO unprofitable. $5 million revenue per quarter isn't going to keep the bills paid.

Let's not forget Echostar and DirecTV give away free equipment every day as well. It's the price you pay to compete for subs.

The price is higher for Voom than E* or D*. Look at the cost of what they are giving away! Plus E* and D* have now enough revenue that they can GUARANTEE to cover the operating cost of giveaway equipment out of the revenues from existing customers. Assuming the $5 million revenue from V*'s customers went 100% in to new installs they would only have enough to cover 10,000 installs (all one room). And V* still has to pay for programming and other operating costs.

V* can survive, but they need to cut costs, get a good long term loan or investors and get the customers needed to pay off those debts.

JL

 

[itsdavetime]

I like Voom and everything, but sorry to say, many of you talk like it's a child of yours and without it, you would be lost. It's a service and we are all customers. They turn off the website without letting anybody know, making us unable to access our account information.

They promised us a DVR months ago and still, nothing has come of it. If you call a CSR at Voom. they'll tell you it's in beta. If you call another, they'll tell you it's released. Where is it?

Same thing for PPV. Promised, but still nothing.

I pay my money for a service full of promises and drama. I like having all of the HD channels also, but I want to pay for a service which I feel good about. I'm still a Voom customer, but my patience is wearing, waiting for the DVR, etc. I can simply take my business elsewhere to a company who treats their customers like customers. Not like pieces of garbage who don't deserve the right to know what is going to happen to their service.

I know you Hardcore Voomers out there who pray to the Voom gods and probably sleep with your remote will bash me for this post, but, oh well. It's how I feel and I'm sure I'm not alone.