Possible Liability CVC Faces In Light Of Actions Against VOOM - 03.01.2005

[bradley]

CVC (Cablevision) invested heavily into the VOOM venture (approximately $1.4B). CVC was unhappy with VOOM’s performance as of December 2004. James Dolan (Chairman, Madison Square Garden, President and Chief Executive Officer, Cablevision Systems Corporation), son of Charles Dolan (founder and chairman of Cablevision Systems Corporation), and the board of CVC voted to put and end to VOOM’s operation.

Prior to the CVC board vote, James Dolan, negotiated with Echostar (DishNetwork) the sale of two of VOOM’s essential assets, the North Dakota satellite uplink facilities and satellite Rainbow 1 for a mere $200M (it’s estimated the combined cost for both assets exceeds $350M).

Charles Dolan attempted to salvage what assets remained by announcing the formation of VOOM HD, LLC. In doing so the CVC board gave Charles Dolan, Tom Dolan, and other family members until February 28, 2005, to synch the deal. For some reason the deal failed to reach an agreement on that date.

CVC’s board then states, in an official press announcement, VOOM will be such down and all existing customers will be given at least 30 days to make the transition on February 28, 2005.

On March 1, 2005, Voom.com website states the following, “Voom has ceased taking new customer orders and will shut down by the end of March.”

As of the close of business, Tuesday, March 1, 2005, VOOM CSRs are still unaware of what is going on and they are still operating, business as usual. In speaking with numerous VOOM CSRs and confirmed with a conversation with a VOOM CSR Senior Operations Supervisor today… sales, installations and contractual agreements and commitments continue to be in effect and enforced. This is the official position; not one predicated on being ill informed, etc; clearly misleading and deceptive practices if you are to take CVC’s press release literally.

CVC is playing a very dangerous game… CVC is making official announcements pertaining to the operation of VOOM and NOT abiding by those said actions.

How? By CVC announcing the demise of VOOM they must release all existing clients from indemnity. AND in doing so they erode VOOM HD, LLC's foundation.

These actions appear to be quite intentional on CVC's behalf

Examine the impact of such actions upon the name, “VOOM.” As a registered trademark it is protected as a valuable and viable asset, by law. A product’s marketing requires protection of and maintaining numerous aspects as to: image, quality, reliability, etc.

CVC’s most recent press release does not reflect responsible behavior in protecting and nurturing the image and branding of “VOOM.”

A question must be posed at this point, has not CVC’s board brought, through its own actions, prematurely, intentionally damaging VOOM’s brand name, and registered trademark? And, simultaneously, has CVC’s board intentionally attempted to subvert the likelihood of VOOM’s ability to survive by taking such actions?

Who suffers from such actions? As a VOOM client, is it not apparent that VOOM’s present parent company, Rainbow Media, CVC, are liable for intentionally undermining VOOM’s potential viability by taking such a concrete stance?

Is it not the employees, shareholders and service subscribers who ultimately suffer from such malicious actions... if this indeed is or is NOT the final chapter?

For more see: (http://www.satelliteguys.us/showthread.php?t=55053)

 

[mike123abc]

How can you be liable for damaging the name of your own company? You need to reexamine your argument. CVC owns 100% of VOOM. CVC can turn off VOOM if they decide to do so, and not have to worry about damaging the good name of VOOM.

 

[bradley]

Is it not the employees, shareholders and service subscribers who ultimately suffer from such malicious actions... if this is indeed NOT the final chapter?

 

[Tvlman]

The VOOM Web Site has the following message posted:


"Voom has ceased taking new customer orders and will shut

down by the end of March."

So what's happening. After James released his memo Charles wrote another. But the VOOM WeB site has the above announcemnt. So who's running the ship? Is it possible that loyal VOOM employees could lock themselves in the building and continue running the broadcasts? Can Charles Dolan make a last minute appeal on VOOM HD NEWS???

STAY TUNED.....

 

[mike123abc]

It is hard to argue when the board voted to shutdown the service and James is still CEO... CVC decided to flush VOOM and its good name down the toilet... Big name brands do go out of business all the time, there is nothing new about this. Often employees are the last to know.

 

[jbphoenix]

I have been reading the postings in the V* forums for the last few weeks while being in limbo about the future of V*. I decided to go ahead and join and post my feelings about the March 31st proposed shutdown.

1. V* is a fantastic service and I have had nothing but praise for the quality, content and service level since becoming a subscriber around a year ago.

2. I paid over $1200.00 to purchase 2 receivers and to have the whole mess installed!!

3. I agree that litigation is forthcoming to CVC, because I did not invest $1200.00 for equipment, just to have the service yanked out from underneath me within a year!! (At least litigation from myself towards CVC!!)

4. I hope that Charles Dolan is able to do some magic on his side to stop the shutdown of V*, for my sake and for everyone else who invested in this service by either purchasing the equipment or just by leasing the equipment and subscribing to the service, either way it is a sad day for all of us who loved this service.

I am waiting a few days before getting my personal atty. involved, but it is a slap in the face for anyone who had faith in V* and bought the equipment, to be slapped in the face by the company who has made promises of "bigger and better things" for the past year. It is those "promises" that are sure to be in litigation in the coming days if this situation is not resolved soon. I am sure that Charles Dolan has excellent legal counsel as well and the developments in the coming days should be interesting to say the least!

 

[jame_g]

I don't understand the logic behind this topic. CVC owns Voom, the trademark/service mark. It's their's to do with as they see fit as long as they own it. About the only people with standing are the shareholders, and with Voom's losses, any action taken to continue the process of shutting down Voom would be judged to be in their interests. CVC is under no obligation to accept any offer, and the simple reason that Voom might be competition to their core cable business is probably reason enough to allow them to cease operations instead of selling.

 

[Bruce]

Also, I bet there is something in the contracts with subscribers that protects Cablevision/Voom if the service goes down.

 

[jame_g]

I have been reading the postings in the V* forums for the last few weeks while being in limbo about the future of V*. I decided to go ahead and join and post my feelings about the March 31st proposed shutdown.

1. V* is a fantastic service and I have had nothing but praise for the quality, content and service level since becoming a subscriber around a year ago.

2. I paid over $1200.00 to purchase 2 receivers and to have the whole mess installed!!

3. I agree that litigation is forthcoming to CVC, because I did not invest $1200.00 for equipment, just to have the service yanked out from underneath me within a year!! (At least litigation from myself towards CVC!!)

4. I hope that Charles Dolan is able to do some magic on his side to stop the shutdown of V*, for my sake and for everyone else who invested in this service by either purchasing the equipment or just by leasing the equipment and subscribing to the service, either way it is a sad day for all of us who loved this service.

I am waiting a few days before getting my personal atty. involved, but it is a slap in the face for anyone who had faith in V* and bought the equipment, to be slapped in the face by the company who has made promises of "bigger and better things" for the past year. It is those "promises" that are sure to be in litigation in the coming days if this situation is not resolved soon. I am sure that Charles Dolan has excellent legal counsel as well and the developments in the coming days should be interesting to say the least!

1. Agreed. I will miss Voom if it does shut down.
2. Ouch, fortunately I rent my receivers and got the $1 install.
3. Check your terms of service agreement, and mentions of equipment warranties. I too would be upset, but the Voom Customer agreement states that you agree to resolve differences individually, by binding arbitration, and without resort to class action if any claim cannot be resolved informally. Courts usually enforce binding arbitration agreements unless there is a compelling reason not to. CVC may offer some sort of refund to equipment owners, so it wouldn't hurt to contact them.
4. Me too!

 

[jame_g]

Also, I bet there is something in the contracts with subscribers that protects Cablevision/Voom if the service goes down.

Yes, Voom Customer Agreement 1c.

"We reserve the right, at our sole discretion, to change, re-arrange, add or delete the Voom services, including but not limited to our programming packages, the selections in those packages, our rates, and any other service we offer at any time."

 

[MasterFX1]

Because the shareholders stood to benefit by selling the remaining VOOM assets. By simply shutting it down, they are literally refusing money to spite VOOM LLC. Unless there's another buyer, which the shutdown announcement rules out, CVC shareholders are losing more value than they have to by accepting $0 for the assets.

If VOOM LLC offered $1 for the whole enchilada, it would be exactly $1 more than $0. The shareholders are being screwed so that they can in turn screw Charles Dolan.

I agree with the Original Poster.

 

[rad]

Yes, Voom Customer Agreement 1c.

"We reserve the right, at our sole discretion, to change, re-arrange, add or delete the Voom services, including but not limited to our programming packages, the selections in those packages, our rates, and any other service we offer at any time."

They should just change all customer agreements to 'We can do whatever we want whenever we want and you can't do a thing about it. If you don't like it go somewhere else." Sure would save a lot of paper.

 

[fredfa]

Let's get serious.
The shareholders have sunk $1.4 billion into VOOM.
Over 2004, it lost money ($661.1 million) at the rate of $12.71 million a week.
That's a loss of $1.81 million a day.
So even if CVC shuts down VOOM at the end of March that will be another $56.11 million down the drain just for March alone.
But if CVC didn't shut VOOM down, it would face far more serious litigation from its stockholders. As has been noted here already, the VOOM contract with its subscribers allows it to do basically whatever it wants with its programming service without penalty.
As to just letting Charlie take VOOM off CVC's hands -- do you think shareholders might sue over losing $1.4 Billion to give Charlie VOOM?
And if they did sue (and they would) the CVC Board of Directors could find themselves personally liable.
Face it, unless Charlie comes up with some serious money, VOOM, sadly, is toast.

 

[jame_g]

Because the shareholders stood to benefit by selling the remaining VOOM assets. By simply shutting it down, they are literally refusing money to spite VOOM LLC. Unless there's another buyer, which the shutdown announcement rules out, CVC shareholders are losing more value than they have to by accepting $0 for the assets.

If VOOM LLC offered $1 for the whole enchilada, it would be exactly $1 more than $0. The shareholders are being screwed so that they can in turn screw Charles Dolan.

I agree with the Original Poster.

That's a very fine line to walk, especially without all the details of the offer and outstanding obligations/debts for Voom. Businesses shut down every day because they deemed an offer not good enough, even if it would have been a little more income or a little less loss. The board or officers have to be deemed negligent in their duties.

To me it sounded like Charles Dolan's offer left some of the outstanding Voom obligations with CVC still at risk. If that's the case, then the board had a valid reason to reject the offer. (It's not just James voting on this, and most of the board is doing what it feels is in the shareholders best interests, not actively participating in a family feud.)

 

[MasterFX1]

The shareholders have sunk the 1.4 billion. It's gone. Again, now the issue is that they are refusing money from VOOM LLC. Obviously Charles needs to make the offer more financially worth while than the shutdown. I would think he at least did that.

 

[jame_g]

The issue that I read into the statement was that in addition to the 1.4B already lost, the offer stuck the shareholders at risk for additional losses in the future. If that is the case, it is valid to accept a known shutdown cost today versus an some potentially unknown future loss.

Again the other issue is that while Chuck may have had financing arranged, it may not have been adequate financing in the eyes of the board. His financing would have left CVC stuck underwriting the risk, or to put it simply as a co-signer if he wasn't able to turn Voom around.

That would be the equivalent of selling your house on land contract without any insurance on it instead of the buyers getting a mortgage and paying you (and your mortgage company) at close. No one can fault you for not accepting your asking price with those terms attached if you don't want to accept that risk.

 

[MasterFX1]

OK, jame g, I see your point. You see mine. Without knowing the final offer made, neither of us know if a suit would have any merit.

 

[jame_g]

Yes. And I like Sean's post in another thread basically confirming that negotiations are continuing. So maybe there will be an offer that is accepted and all this will become a moot point!

 

[MasterFX1]

Praying...