[VOOM] CABLEVISION'S VOOM GOES BOOM
CABLEVISION'S VOOM GOES BOOM
BY HARRY BERKOWITZ
STAFF WRITER
March 1, 2005
Cablevision announced last night it is pulling the plug on its Voom
satellite TV service and on chairman Charles Dolan's quixotic plan
to take the failed venture off the company's hands a nd resuscitate
it.
The company, which had signed a letter of intent on February 10 to
give Voom to a private firm being formed by Dolan, said discussions
with him had ended without reaching a definitive agreement by
yesterday's deadline set by the board. "As a result, Cablevision
will close down the Voom business," the company said.
The outcome is a major defeat for the 78-year-old visionary who
founded Cablevision and who controls a majority of its voting shares
but was unable to convince the board-including his son, chief
executive James Dolan - to keep one of his boldest dreams alive.
The company's announcement meant that Dolan may have failed to come
up with a financing plan or operational plan that the board could
accept.
The outcome left open the question of Dolan's future role in
Cablevision Systems Corp. and his possible plans for the company and
his stake in it, since he had shifted so much of his attention and
passion to the nationwide satellite TV service and had clashed so
fiercely with his CEO son.
Analysts had speculated that to come up with hundreds of millions in
dollars in Voom financing, Dolan would have had to sell or pledge a
big chunk of his Cablevision stake or even seek to sell Cablevision
to another company.
Cablevision announced on Jan. 20 that it had agreed to sell Voom's
sole satellite to EchoStar Communications for $200 million rather
than continue to swallow Voom's losses. Its operating loss totaled
$660 million for 2004 and it had only 26,000 customers as of Sept.
30.
"I'm surprised that Charles Dolan was willing to let Voom come to an
end, given how hard he fought for it all along," Fulcrum Global
Partners analyst Richard Greenfield said. "But Voom disappearing,
however it happened, is a long-term positive for Cablevision
shareholders. Although it may lessen speculation of an immediate
sale of Cablevision to fund Voom, the good news is, Voom is really
dead."
Under Cablevision's original letter of intent, the firm being
created by Dolan, his son Tom, who runs Jericho-based Voom, and some
other unidentified family members would have gotten Voom's high-
definition channels, its customers and its sizable liabilities and
would have had to lease satellite space.
In an amended regulatory filing last week, Cablevision, which had
said it was slashing its estimated value of Voom by $355 million,
added that there may be additional "impairment charges," especially
if it could not close a deal with Dolan.
Dolan has blamed the board's defiance on the post-Enron era, in
which directors are afraid that they could be held personally liable
if they back risky ventures and maneuvers that may backfire. The
Cablevision board discussed Voom at a special meeting yesterday.
Bethpage-based Cablevision said yesterday that remaining Voom
customers will be given a transition period of at least 30 days
before service is cut off and that its employees will be encouraged
to seek other jobs at Cablevision.
Copyright © 2005, Newsday, Inc.
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