Cablevision's Dolan Ousts Three From Board Over Voom Shut Down (Bloomberg) 3.3.05

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Cablevision's Dolan Ousts Three From Board Over Voom Shut Down

March 3 (Bloomberg) -- Cablevision Systems Corp. Chairman Charles Dolan ousted three directors after a dispute with the board over the closure of the Voom satellite-television service, founded by Dolan two years ago.


Dolan, who owns a majority of Cablevision's Class B shares, yesterday installed executives including Liberty Media Corp. Chairman John Malone and former Viacom Inc. Chief Executive Frank Biondi. Quadrangle Group managing principal Steven Rattner is among the departing directors, Dolan said in a statement issued at 8:09 p.m. New York time.


The boardroom coup at Cablevision, the largest cable- television operator in New York, escalates a disagreement between Dolan and his son, Cablevision Chief Executive Officer James Dolan, over the Bethpage, New York-based company's decision to close money-losing Voom and sell its satellite. Charles Dolan, 78, and another son, Thomas, offered to buy the rest of the unit before Cablevision ended talks this week.


``Mr. Dolan is hoping new blood on the board will allow him to buy Voom from Cablevision rather than have it shut down,'' said New York-based Fulcrum Global Partners LLC analyst Richard Greenfield, who rates Cablevision shares ``buy.''


Dolan said a majority of Class B shareholders, all family members or partnerships or trusts for the family, voted to add Malone, Biondi, former ITT Corp. Chairman Rand Araskog and former Citizens Communication Co. Chairman Leonard Tow.


They will replace Rattner, the late John Tatta, and recently retired Cablevision officers William Bell and Sheila Mahoney, Dolan said.


The new members of the board may be more receptive to Dolan's argument that Cablevision stands to gain more from selling the unit's remaining assets than shutting it down, Greenfield said.


Voom


Voom drained $1.4 billion from Cablevision, according to Merrill Lynch & Co. analyst Jessica Reif Cohen. The company last month posted a fourth-quarter loss because of $354.9 million in costs related to the Rainbow DBS unit, of which Voom was a part.


Dolan championed the satellite business, which attracted 26,000 subscribers, as an alternative to DirecTV Group Inc., the biggest satellite-TV company with 13.9 million customers, and No. 2 EchoStar Communications Corp.'s Dish service


Dolan and Thomas Dolan created Voom HD LLC to purchase Voom after Cablevision sold the service's main orbiter to EchoStar.


Cablevision spokesman Charlie Schueler yesterday declined to comment. Edward Horowitz, a spokesman for Dolan, didn't immediately return a call seeking comment.


Cablevision's board will be asked at a March 7 meeting to increase its size so the company's Class B shareholders can elect Brian Sweeney to fill a new seat, Dolan said in the statement. Sweeney is a vice president at Cablevision and Dolan's son-in- law.


The four new board members will hold their seats until the company's May 19 annual meeting and then be re-nominated, Dolan said yesterday.


Malone


In bringing Malone, 63, to the board, Dolan gains a director who ran cable-TV provider Tele-Communications Inc. for more than 25 years. Malone kept control of Liberty Media, TCI's cable- programming arm, after selling TCI to AT&T Corp. in 1999. TCI at the time was Cablevision's largest common shareholder, and AT&T got that stock in the TCI purchase.


Since then, Malone has built Liberty into a media company that includes the QVC shopping network, the Starz group of movie cable networks and a 50 percent stake in Discovery Communications, owner of the Discovery Channel.


Malone last year acquired an 18 percent voting stake in Rupert Murdoch's News Corp. Murdoch said Feb. 2 that an agreement to reduce Malone's stake in the company may be reached in nine months.


Biondi


Biondi was Viacom's CEO from 1987 until 1996, when Chairman Sumner Redstone ousted him, saying Biondi lacked the fast-paced and aggressive management style needed to run Viacom. Biondi, 60, became chairman and CEO of Universal Studios Inc. and since 1999 has been a senior managing director at Waterview Advisers LLC.


Tow until 2004 worked at Stamford, Connecticut-based Citizens Communications Corp., a telecommunications company, and its predecessors. Araskog sits on the board of ITT, International Steel Group Inc. and Rayonier Inc., a forestry products company.


Cablevision shares fell 13 cents today in New York Stock Exchange composite trading. They've risen 19 percent in the last 12 months.


Araskog declined to comment. Rattner didn't immediately return a call and e-mail seeking comment after business hours. Liberty spokesman Mike Erickson didn't immediately return a call seeking comment. Biondi didn't immediately return a call to his office after business hours.

Last Updated: March 3, 2005 02:51 EST
 
a very funny letter

Cablevision Letter to Charles Dolan
March 3, 2005 6:15 p.m.

Below is the text of a letter sent by Cablevision director Victor Oristano to Chairman Charles Dolan regarding the battle over whether to shut down its Voom satellite TV service.

March 3, 2005

Mr. Charles F. Dolan
Cablevision Systems Corporation
1111 Stewart Avenue
Bethpage, New York 11748-3581

Dear Chuck:

As you know, on February 28th, after failing to reach an agreement with VOOM HD, LLC concerning an acquisition of the VOOM assets that are not under contract to be sold to EchoStar Satellite L.L.C., the Special Committee and the Board determined that negotiations should cease and that the VOOM business should be shut down.

In a call with you yesterday morning, you told us that you intend to approach EchoStar to negotiate an arrangement whereby, with EchoStar's agreement, Rainbow-1 could be brought together with the VOOM business outside of Cablevision. You agreed that whether you were able to succeed in that effort or not, Cablevision would get out of the satellite business, and you told us explicitly that you would not take any action to override any decision that the Board took on or before February 28th. For our part, we agreed to support a delay in the shutdown of VOOM for a short period while you engage in those discussions and that if you are able to negotiate such an arrangement with EchoStar on terms satisfactory to us, we would be prepared to renew discussions with you for a sale of the VOOM business, so long as the totality of such arrangements puts Cablevision in a significantly better position than it would be in were it to close the pending transaction with EchoStar and engage in a shutdown of the VOOM business.

We now understand that the VOOM business continues to take on subscribers and that this is being done, at least in part, through a newly-created web site (voomllc.com) remarkably similar to VOOM's existing web site (voom.com). These efforts -- likely to deceive new subscribers and the public into believing that VOOM is still an authorized going business of Cablevision -- are in direct contradiction to the action taken by the Board on February 28th because they are an expansion rather than a shutdown of the business, and they are being done with funds that have not been authorized by the Board. To be clear, Cablevision had authorized funding for VOOM through February 28th, and the Board did not extend that funding beyond that date. It is imperative that this expansion of the business stop immediately and that actions taken by the Board be respected and carried out by the company's officers.

We are very concerned that the VOOM situation resolve itself promptly. In all events, you must ensure that your actions do not jeopardize our obligations to EchoStar or delay the company's exit from the VOOM business. If you are unable to come to terms with EchoStar in the very near future, we expect that you will honor your commitment to us to do nothing to impede a shutdown of the VOOM business. We look forward to a report from you by our March 7th Board Meeting.

Sincerely,

/s/ Victor Oristano
Victor Oristano
On Behalf of the Independent Committee and the Class A Directors
 
This was posted hours earlier. Need to be much faster around here.
 

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