Post by dkennedy on Mar 3, 2005 9:01:08 GMT -5
Cablevision Founder Replaces Directors
By GERALDINE FABRIKANT
Published: New York Times March 3, 2005
In a sign of the escalating battle between the founder of Cablevision, Charles F. Dolan, and his son, James, who is the chief executive, Charles Dolan said last night that he was replacing 3 of 13 directors with 4 new members.
Joining the board of the Cablevision Systems Corporation are John C. Malone, chairman of Liberty Media; Frank J. Biondi Jr., the former chief of Viacom and Universal Studios; Dr. Leonard Tow, the former chief executive of Citizens Communications; and Rand Araskog, the former chief executive of the ITT Corporation. Cablevision acquired Madison Square Garden from ITT when it was led by Mr. Araskog.
The new directors will succeed William Bell and Sheila Mahony, who recently retired as company officers; Steven Rattner, the managing partner of the Quadrangle Group, a private equity firm; and the late John Tatta.
The move appears to be aimed at adding directors who are friendly to Charles Dolan and his dream of building Voom, the high-definition television service.
Cablevision had no comment last night. Mr. Dolan, whose office put out the announcement, could not be reached for comment.
It is not clear whether the company and Cablevision's board had any recourse in stopping the move. Mr. Dolan's statement last night said the changes were approved by a majority of the Class B shareholders. Mr. Dolan has control of the family trust that owns those shares.
People close to the situation said that Mr. Dolan was unhappy with Ms. Mahony and Mr. Bell - who had voted against continuing the financing of Voom - considering them disloyal after he had given them major roles at Cablevision.
He was also said to be unhappy with Mr. Rattner, who had refused to side with him on Voom.
In the Sarbanes-Oxley era, such unilateral decisions are likely to receive intense scrutiny and critics are likely to argue that Voom, an undertaking that has already cost hundreds of millions, may not be in the best interests of shareholders.
Charles Elson, who leads the Weinberg Center for Corporate Governance at the University of Delaware, said the appointments not only paralyzed the company but created problems on the board. He pointed out that the directors had a fiduciary responsibility to the company, not to Mr. Dolan.
In his statement last night, Mr. Dolan also said that the Class B shareholders would exercise their right to nominate and elect 75 percent of the directors at the next meeting, in May.
Cablevision recently voted not to continue to finance Voom and although Mr. Dolan had said he would assume the assets, he and the company did not come to terms by Monday, which was the deadline. At that point Cablevision said it was shutting the service. Mr. Dolan then issued a statement that he was still interested in buying the assets.
On Wednesday, the company shut down the Web site for Voom: www.voom.com. But it appears that Charles Dolan, has begun a Web site to take orders: www.voomllc.com.
The maneuvering has left the future of the HDTV business uncertain.
The family battle has fueled speculation that the company will ultimately be sold. Meanwhile, the feuding has raised questions about how a company can be run with so much continuing friction among directors.
In a separate development, Cablevision employees received an e-mail message instructing them not to destroy any e-mail messages relating to Rainbow Programming because of an investigation by the Securities and Exchange Commission.
In June 2003, Cablevision said it had found accounting flaws after a review of its Rainbow Media subsidiary. The company also said then that it was being investigated by the S.E.C. in connection with improper accounting. The Rainbow Media subsidiary consists of cable networks including the Independent Film Channel; WE: Women's Entertainment; and American Movie Classics. At the time, it fired 14 employees including Kate McEnroe, the president of the classic movie network.
While S.E.C. investigations can continue for years, it is not clear why the company sent out an e-mail message yesterday.
The company declined to comment yesterday on both matters.
By GERALDINE FABRIKANT
Published: New York Times March 3, 2005
In a sign of the escalating battle between the founder of Cablevision, Charles F. Dolan, and his son, James, who is the chief executive, Charles Dolan said last night that he was replacing 3 of 13 directors with 4 new members.
Joining the board of the Cablevision Systems Corporation are John C. Malone, chairman of Liberty Media; Frank J. Biondi Jr., the former chief of Viacom and Universal Studios; Dr. Leonard Tow, the former chief executive of Citizens Communications; and Rand Araskog, the former chief executive of the ITT Corporation. Cablevision acquired Madison Square Garden from ITT when it was led by Mr. Araskog.
The new directors will succeed William Bell and Sheila Mahony, who recently retired as company officers; Steven Rattner, the managing partner of the Quadrangle Group, a private equity firm; and the late John Tatta.
The move appears to be aimed at adding directors who are friendly to Charles Dolan and his dream of building Voom, the high-definition television service.
Cablevision had no comment last night. Mr. Dolan, whose office put out the announcement, could not be reached for comment.
It is not clear whether the company and Cablevision's board had any recourse in stopping the move. Mr. Dolan's statement last night said the changes were approved by a majority of the Class B shareholders. Mr. Dolan has control of the family trust that owns those shares.
People close to the situation said that Mr. Dolan was unhappy with Ms. Mahony and Mr. Bell - who had voted against continuing the financing of Voom - considering them disloyal after he had given them major roles at Cablevision.
He was also said to be unhappy with Mr. Rattner, who had refused to side with him on Voom.
In the Sarbanes-Oxley era, such unilateral decisions are likely to receive intense scrutiny and critics are likely to argue that Voom, an undertaking that has already cost hundreds of millions, may not be in the best interests of shareholders.
Charles Elson, who leads the Weinberg Center for Corporate Governance at the University of Delaware, said the appointments not only paralyzed the company but created problems on the board. He pointed out that the directors had a fiduciary responsibility to the company, not to Mr. Dolan.
In his statement last night, Mr. Dolan also said that the Class B shareholders would exercise their right to nominate and elect 75 percent of the directors at the next meeting, in May.
Cablevision recently voted not to continue to finance Voom and although Mr. Dolan had said he would assume the assets, he and the company did not come to terms by Monday, which was the deadline. At that point Cablevision said it was shutting the service. Mr. Dolan then issued a statement that he was still interested in buying the assets.
On Wednesday, the company shut down the Web site for Voom: www.voom.com. But it appears that Charles Dolan, has begun a Web site to take orders: www.voomllc.com.
The maneuvering has left the future of the HDTV business uncertain.
The family battle has fueled speculation that the company will ultimately be sold. Meanwhile, the feuding has raised questions about how a company can be run with so much continuing friction among directors.
In a separate development, Cablevision employees received an e-mail message instructing them not to destroy any e-mail messages relating to Rainbow Programming because of an investigation by the Securities and Exchange Commission.
In June 2003, Cablevision said it had found accounting flaws after a review of its Rainbow Media subsidiary. The company also said then that it was being investigated by the S.E.C. in connection with improper accounting. The Rainbow Media subsidiary consists of cable networks including the Independent Film Channel; WE: Women's Entertainment; and American Movie Classics. At the time, it fired 14 employees including Kate McEnroe, the president of the classic movie network.
While S.E.C. investigations can continue for years, it is not clear why the company sent out an e-mail message yesterday.
The company declined to comment yesterday on both matters.