NewsDay
Charles in charge
Cablevision family feud over Voom has investors up in arms as Dolan Sr. turns the tables on son and CEO
BY HARRY BERKOWITZ
STAFF WRITER. Staff writer Mark Harrington contributed to this story.
March 4, 2005
Cablevision Systems Corp. was reeling yesterday after a palace coup in which chairman Charles Dolan ousted three directors and recaptured control of the company from his rebellious CEO son, James.
As the company's stock plunged 5 percent yesterday, Wall Street assailed what an analyst called the "bizarre" turn of events, in which Charles Dolan picked five new directors, including a son-in-law, giving him a theoretical 8-7 edge on the board, which includes four Dolans.
In response, the board's six independent directors, who were not ousted, wrote a letter to Charles Dolan yesterday demanding he stop seeking new subscribers for the company's Voom satellite TV service, which the board had ordered to be shut, and accused him of misusing company funds to do so.
"The 'Alice in Wonderland' Dolan family-boardroom struggle at Cablevision must surely rank as one of the most byzantine in memory," analyst Craig Moffett of Sanford C. Bernstein & Co. told investors.
However, a spokesman for Charles Dolan, Ed Horowitz, said Dolan believes he can turn around Voom's fortunes and that the new directors are an improvement. Dolan was not available for comment.
It was the war over Voom's fate, in which James sided with the board's majority to defeat Charles, that helped precipitate his replacement of directors. The company said the Voom shutdown was being delayed as Charles Dolan prepares to present to the new board by Monday his plans to take Voom off Cablevision's hands and resuscitate it.
At the same time, Cablevision disclosed that federal regulators had opened an informal inquiry into trading of the company's stock and into the series of events leading to the board's orders to abandon plans to spin off Voom and sell its satellite to EchoStar.
To gain the power to replace the directors, Charles Dolan combined Cablevision stock he controls with that controlled by his wife, Helen, and brother, Cleveland Indians owner Lawrence Dolan, to line up the required majority of the family's shares.
The new directors are Liberty Media chairman John Malone, former Viacom chief Frank Biondi Jr., former ITT chief Rand Araskog, whose company had sold control of Madison Square Garden to Cablevision, and former Citizens Communications chief executive Leonard Tow, plus son-in-law Brian Sweeney, a Cablevision senior vice president, whose addition requires board approval. They replace Quadrangle Group managing partner Steven Rattner, former Cablevision executives William Bell and Sheila Mahony, and the late John Tatta, who died last month. Charles Dolan said he would seek to further increase the directors he chooses from 60 percent to 75 percent.
"I don't know whether they have all the facts before them," Mahony said of the new directors and Voom in an interview. Moffett said that the first four new directors are legendary dealmakers, which raises the chances Cablevision or part of it may be sold, and that they could be held personally liable if their actions hurt shareholders.
"It is imperative that this expansion of the business stop immediately," independent director Victor Oristano said in the letter to Charles Dolan.
Robert Heim, a former Securities and Exchange Commission associate regional director, said "it's a pretty good bet the SEC is looking into possible insider trading" at Cablevision, based on the company's disclosure of an inquiry. The stock price fell by $1.59 per share to $28.65.
Charles in charge
Cablevision family feud over Voom has investors up in arms as Dolan Sr. turns the tables on son and CEO
BY HARRY BERKOWITZ
STAFF WRITER. Staff writer Mark Harrington contributed to this story.
March 4, 2005
Cablevision Systems Corp. was reeling yesterday after a palace coup in which chairman Charles Dolan ousted three directors and recaptured control of the company from his rebellious CEO son, James.
As the company's stock plunged 5 percent yesterday, Wall Street assailed what an analyst called the "bizarre" turn of events, in which Charles Dolan picked five new directors, including a son-in-law, giving him a theoretical 8-7 edge on the board, which includes four Dolans.
In response, the board's six independent directors, who were not ousted, wrote a letter to Charles Dolan yesterday demanding he stop seeking new subscribers for the company's Voom satellite TV service, which the board had ordered to be shut, and accused him of misusing company funds to do so.
"The 'Alice in Wonderland' Dolan family-boardroom struggle at Cablevision must surely rank as one of the most byzantine in memory," analyst Craig Moffett of Sanford C. Bernstein & Co. told investors.
However, a spokesman for Charles Dolan, Ed Horowitz, said Dolan believes he can turn around Voom's fortunes and that the new directors are an improvement. Dolan was not available for comment.
It was the war over Voom's fate, in which James sided with the board's majority to defeat Charles, that helped precipitate his replacement of directors. The company said the Voom shutdown was being delayed as Charles Dolan prepares to present to the new board by Monday his plans to take Voom off Cablevision's hands and resuscitate it.
At the same time, Cablevision disclosed that federal regulators had opened an informal inquiry into trading of the company's stock and into the series of events leading to the board's orders to abandon plans to spin off Voom and sell its satellite to EchoStar.
To gain the power to replace the directors, Charles Dolan combined Cablevision stock he controls with that controlled by his wife, Helen, and brother, Cleveland Indians owner Lawrence Dolan, to line up the required majority of the family's shares.
The new directors are Liberty Media chairman John Malone, former Viacom chief Frank Biondi Jr., former ITT chief Rand Araskog, whose company had sold control of Madison Square Garden to Cablevision, and former Citizens Communications chief executive Leonard Tow, plus son-in-law Brian Sweeney, a Cablevision senior vice president, whose addition requires board approval. They replace Quadrangle Group managing partner Steven Rattner, former Cablevision executives William Bell and Sheila Mahony, and the late John Tatta, who died last month. Charles Dolan said he would seek to further increase the directors he chooses from 60 percent to 75 percent.
"I don't know whether they have all the facts before them," Mahony said of the new directors and Voom in an interview. Moffett said that the first four new directors are legendary dealmakers, which raises the chances Cablevision or part of it may be sold, and that they could be held personally liable if their actions hurt shareholders.
"It is imperative that this expansion of the business stop immediately," independent director Victor Oristano said in the letter to Charles Dolan.
Robert Heim, a former Securities and Exchange Commission associate regional director, said "it's a pretty good bet the SEC is looking into possible insider trading" at Cablevision, based on the company's disclosure of an inquiry. The stock price fell by $1.59 per share to $28.65.
