Latest Cablevision Twist: Voom and Board3/03/2005 12:28 AM Eastern
The battle between Cablevision Systems Corp. chairman Charles Dolan and his son, CEO James Dolan, took a strange twist Wednesday night after the elder Dolan ousted three members of Cablevision’s board of directors in favor of four industry veterans who could be more receptive to his plans to buy the MSO’s HD direct-broadcast satellite business.
Late Wednesday, Charles Dolan announced that he was replacing three board members -- former vice chairman William Bell; former executive vice president of communications, government and public affairs Sheila Mahony; and investment banker Steven Rattner -- and filling a vacant board seat formerly held by the late John Tatta with Liberty Media Corp. chairman John Malone, former Century Communications Corp. chairman Leonard Tow, former ITT Corp. chairman and CEO Rand Araskog and former Viacom Inc. CEO Frank Biondi.
The moves came at a curious time. On Feb. 28, Cablevision announced that it had ceased talks with Voom HD LLC, an entity created by Charles Dolan and his son, Thomas (Cablevision’s chief information officer), to purchase the remaining assets of Rainbow DBS (marketed as Voom), and that the service would be shut down in 30 days.
Voom has been a drag on Cablevision for months -- it lost $661.4 million in 2004 -- and it is in need of funding. Cablevision reached an agreement to sell Voom’s satellite assets to EchoStar Communications Corp. in January for $200 million. Voom HD would have purchased the remaining assets.
Charles and James Dolan have been at loggerheads ever since James apparently won a boardroom battle in December, convincing a majority of Cablevision’s board to pull the plug on Voom’s financing.
But by shuffling Cablevision’s board of directors, Charles Dolan appeared to give himself more breathing room in ultimately winning Voom. In a securities filing Thursday, Cablevision said it had postponed the shutdown of Voom until March 7, and it will allow Voom HD LLC to present its case to buy the assets to the board on that same day.
According to the filing, Charles Dolan will also ask the board March 7 to name his son-in-law, Cablevision senior VP of electronic media Brian Sweeney, to the board of directors.
Charles Dolan, as the largest holder of supervoting class-B shares, also has the right to elect 75% of the total board. In the filing, he said he would exercise that right at the next company annual meeting of shareholders, at which time he would also request that the number of board members be increased to 18.
Including Tatta’s vacant seat, Cablevision currently has 14 board members.
Just what Charles Dolan’s motivation is for rejiggering the board is anyone’s guess, but several members of the financial community pointed out that the four new board members have strong entrepreneurial backgrounds and could be more sympathetic than the other three members to his Voom aspirations. The ousted board members voted against Charles Dolan’s Voom proposal, according to sources.
With Voom’s fate uncertain, investors drove down Cablevision’s stock by as much as $2.24 per share Thursday to $28 each. The stock rebounded slightly to $28.88 each (down $1.36 per share) in afternoon trading Thursday.