Voom sold to Echostar

[Skaggs]

Cablevision sells satellite unit to EchoStar
Unprofitable venture fetches $200 million[/b]
The Associated Press, Updated: 8:51 a.m. ET Jan. 21, 2005[/color]

NEW YORK - Moving to unload an unprofitable venture, Cablevision Systems Corp. on Thursday sold its satellite broadcasting business to rival EchoStar Communications Corp. for $200 million cash.

The Long Island-based cable TV provider started the high-definition satellite venture, which is marketed under the brand name VOOM, in the fall of 2003. But the operation has struggled to turn a profit and has dragged on Cablevision's finances and share price, as investors worried about how long the company would fund VOOM.

The deal also calls for EchoStar, based in Englewood, Colo., to acquire ground facilities and related assets in Black Hawk, S.D. The sale is subject to review by the Federal Communications Commission and other regulators.

In a statement, Cablevision said it was continuing to review options for its remaining satellite assets, and that VOOM service would continue "during a transition period."

In its third quarter earnings report last year, Cablevision said the VOOM service had just 26,000 customers and had posted an operating loss of $75.3 million on revenues of $5.9 million.

EchoStar said it's assessing how the Cablevision satellite can be used to enhance the company's DISH Network's existing service.

Cablevision has about 3 million cable customer households around New York City. It also owns Madison Square Garden, the New York Knicks basketball team and the New York Rangers hockey team.

Cablevision shares rose $1.10, or 4.5 percent, to close at $25.48 Thursday on the New York Stock Exchange. On Dec. 21, when the Bethpage, N.Y.-based company canceled plans to spin off the satellite unit and began exploring alternatives, the shares surged more than 13 percent.

[Skaggs]

Cablevision Sells Satellite to EchoStar[/b]
By ANDREW ROSS SORKIN and GERALDINE FABRIKANT
Published: New York Times, January 21, 2005[/color]

Ending a father-son boardroom battle, Cablevision Systems Corporation dismantled its struggling satellite business last night by selling its satellite to EchoStar Communications for $200 million in cash.

The sale comes just two days after Cablevision's 78-year-old founder, Charles F. Dolan, lost a showdown with his son James L. Dolan, the company's 49-year-old chief executive, over the fate of the satellite business.

The younger Dolan and the board voted to sell the satellite business, which had been criticized by investors as a black hole, despite vehement opposition from his father, who has heralded the business as the future of the company.

The family rift has renewed speculation among some on Wall Street that the Dolans could be driven to put Cablevision up for sale.

The schism became so great that there were times when the elder Dolan stopped speaking to his son, according to executives close to the company.

Even as late as yesterday, the elder Dolan and other members of his family including his other son, Thomas Dolan, executive vice president of the company, had been trying to hatch their own plan to buy the satellite business, called Rainbow DBS, according to the executives.

A recent memorandum distributed to employees said, "Potential bidders for RDBS include members of the Dolan family."

A spokesman for Cablevision declined to comment. Cablevision stock rose $1.10 yesterday, or 4.5 percent, to close at $25.48.

The sale of the satellite business to EchoStar ends Mr. Dolan's dream to create his third major media sensation.

In addition to creating Cablevision, Mr. Dolan founded HBO, the subscription-based cable network now owned by Time Warner. Mr. Dolan often compared his fledgling satellite business to HBO, frequently reminding investors that skeptics had belittled his early efforts to start that network, too.

Mr. Dolan had tried to create a niche in the satellite market by specializing in broadcasting more high-definition television programming than the other satellite providers or cable operators. But his vision may have been ahead of its time. Sales of high-definition televisions and demand for programming to match have not materialized as fast as he and many analysts had predicted.

The service, called Voom, which started in 2003, has only 26,000 subscribers and has lost more than $76 million. The company said it would continue to provide service to its current customers during a transition period, but did not elaborate on what would eventually happen to them.

Under the terms of the deal yesterday, EchoStar will pay $200 million in cash for Cablevision's satellite, called Rainbow 1, as well as federal licenses to construct, introduce and operate satellite services over 11 frequency channels. In addition, EchoStar will buy the company's ground facility in Black Hawk, S.D., and related assets.

EchoStar, which operates under the Dish brand, said it was "assessing how the Rainbow satellite's flexibility can best be utilized to enhance Dish Network's existing service."

Cablevision, which is based in Bethpage, N.Y., said it would continue to explore strategic alternatives for its remaining Rainbow DBS-related assets, including programming, equipment and spectrum.

Cablevision originally said in October 2003 that it planned to spin off the satellite business into a company called Rainbow Media Enterprises, which was also supposed to include three of Cablevision's networks: American Movie Classics, the Independent Film Channel and Women's Entertainment. But after those plans were delayed twice, Cablevision shelved them and began exploring alternatives for the business.

Besides their own infighting, Cablevision and the Dolans are enmeshed in a public fight over the construction of the proposed $1.4 billion football stadium on the West Side of Manhattan. Cablevision, in addition to operating a cable television service, owns Madison Square Garden and Radio City Music Hall, and it views the stadium as competition. It has spent millions of dollars in advertising to oppose it and is also part of a lawsuit against the city seeking to block the building's development.

[Skaggs]

Cablevision drops Voom
Despite opposition from chairman Dolan, the board decides to sell struggling service’s only satellite to EchoStar[/b]
BY HARRY BERKOWITZ, NEWSDAY STAFF WRITER, January 21, 2005[/color]

Defying chairman Charles Dolan, Cablevision Systems Corp. announced last night it will disband its Voom satellite TV service by selling the failed venture's sole satellite to competitor EchoStar Communications.

The announcement came one day after Dolan told Voom employees in a remarkable internal memo that he might personally try to buy the nationwide service from the cable company he founded four decades ago rather than see his vision of a futuristic satellite TV operator disbanded.

On Wednesday, the board decided by a narrow margin to sell off Voom in one form or another rather than invest hundreds of millions of dollars more in a loss-plagued operation that attracted few subscribers. In the board vote, chief executive James Dolan was in the majority and his father in the minority, an unprecedented split in the family.

EchoStar, whose Dish Network is the nation's second-biggest satellite TV service, will pay $200 million, a fraction of what Cablevision has invested in the venture so far, for the satellite that was launched in 2003, government licenses for satellite frequencies and the contents of a ground control facility in Black Hawk, S.D.

During a transition, Voom will continue to provide service to its subscribers, which numbered a mere 26,000 as of Sept. 30, before the plug is pulled on a dream that Charles Dolan has pursued for many years. Dolan's effort failed in the face of competition from DirecTV and EchoStar, which have more than 22 million subscribers combined.

In the Wednesday memo to Voom staff, the 78-year-old billionaire and his son Thomas, who runs Voom, called the board decision "startling" and said it reflects "today's post-Enron regulatory climate, which places great emphasis on the potential legal liability of directors who sit on the boards of corporations involved with new enterprises such as RDBS," referring to Rainbow DBS, the formal name for the service.

The issue created an extraordinary split in the Dolan family. It could not be learned whether Patrick, another Dolan son and board member, sided with Charles and Thomas or James. Charles had planned to become chairman of Voom, with Thomas as chief executive, before the board dropped plans to spin it off as part of a risk-oriented separate company. The family split raises questions as to whether friction will remain in the upper ranks of Cablevision as CEO James seeks to end years of side bets on risky ventures and start producing reliable profits.

If Voom were kept running as a business, potential bidders included members of the Dolan family, the Wednesday memo stated, adding, "We love working with a skilled group as dedicated as the RDBS staff and we love the Voom project."

The contents of the memo, which found its way to the Internet, were confirmed by sources who had seen the original.

Cablevision is the New York area's biggest cable service, with 3 million subscribers.

Last month, the Cablevision board canceled plans to spin off Voom into a separate company that focused on HDTV service and programming.

That vote was 8-6, according to a Wall Street source. The decision followed months of repeated delays as the spinoff failed to win Securities and Exchange Commission approval.

Despite that, Charles Dolan, who has defied naysayers many times in the past, had refused to concede.

"It is our expectation that RDBS will be offered for sale as an operating business," the Voom memo stated. "To do otherwise risks minimizing the return to Cablevision. Sale of RDBS requires RDBS to continue to operate normally."

But amid signs that the Voom issue would be settled, Cablevision shares yesterday closed up $1.10 to $25.48, a gain of more than 4.5 percent.

Dolan's deals and duds

Charles Dolan has crafted many legendary deals over four decades. Some have worked out, others have not.

DEALS

Manhattan Cable.Wins franchise for southern Manhattan, 1965.

HBO.Launches first cable pay movie service.

Cablevision.Offers service on Long Island, 1973.

MSG.Buys Garden, Knicks and Rangers, 1995, 1997.

Bravo.Sells critically acclaimed channel to NBC, 2002.

DUDS

HBO.Facing cash crunch, sells it and Manhattan franchise to Time Inc., 1972.

Yankees, Mets.Fails to win bid for Yankees, 1998; loses telecasts to YES Network, 2001-02; loses future Mets telecasts, 2004.

Wiz.Buys chain to promote services, shuts it after heavy losses, 1998-2003.

Cell phones.Sells ailing venture to Verizon Wireless, 2003.

[MasterFX1]

I am totally bummed. I will hate to lose STARZ-HD, Encore HD, MAX HD and TMC-HD. I watched those channels a lot, and nobody else can currently provide them to me.

[MasterFX1]

A quote from an extremely informed poster on the Voom Forum:

"It is interesting reading but right away in the second sentence the lies start. Echostar did not "buy" Voom. Echostar made an offer to purchase the Rainbow 1 satellite and up-link center that is under construction. This is how a media giant tries to skew the facts to manipulate public opinion. It is not factual nor is it ethical to spread false information

Just because a company sells off a physical asset does not mean the company it's self sold. Voom has many options of how to get the programming out to Voom customers and Voom is very much still in business."

[dkennedy]

Echostar holding on to Voom satellite

BY HARRY BERKOWITZ
STAFF WRITER

March 18, 2005

EchoStar Communications chairman Charlie Ergen said yesterday he has no intention of giving up the Voom satellite that the company is buying from Cablevision.

Charles Dolan, chairman of Cablevision Systems Corp. and founder of its imperiled Voom satellite TV service, has been trying to alter the deal that his chief executive son James signed in January to sell the satellite for $200 million as part of a plan to shut down Voom.

"The only thing that would prevent us from acquiring the satellite would be if we don't get [Federal Communications Commission] approval," Ergen said during a call with analysts. "Other than that we intend to move forward with the transaction," he said, adding that he expects to get approval in three to six months.

Cablevision's board has given Dolan, who opposes the shutdown, until March 31 to come up with a plan to save Voom, which had $660 million in losses last year, and take it off the company's hands.

But if Voom is forced to switch to a different satellite, it would have to quickly replace satellite dishes installed at 40,000 customer homes with bigger, compatible ones, analysts say. That would make Dolan's rescue attempt an even more challenging and expensive mission.

In a regulatory filing with the Securities and Exchange Commission, Cablevision said Voom has $285 million in assets, including the satellite, and $136 million in liabilities.

Ergen did not say whether he would consider leasing space on the Voom satellite to Dolan, who has put up $10 million of his own cash and Cablevision stock to help keep Voom alive.

When asked what the message is when a cable pioneer like Dolan is betting some of his cable stock on satellite TV, Ergen said Dolan "very much has visions that make sense."

EchoStar, whose service is called Dish Network, gained 430,000 customers in the fourth quarter, helping push profits to $70 million, compared with $2.7 million a year earlier. Revenue rose 28 percent to $1.93 billion. In January, EchoStar announced it had topped 11 million subscribers.

EchoStar said on Wednesday that in an internal review it had found "significant deficiencies" in record-keeping that drew the SEC's attention but that no adjustment of its financial statements would be required and procedures were being corrected. Its stock price jumped 2.8 percent yesterday, or 81 cents per share, to $29.64.

Copyright © 2005, Newsday, Inc.

[MasterFX1]

Jeez... for a service that many say is close to dead, they've added 21 new channels over the last two weeks! And the propososed rate hikes for 2005 have never happened to existing members who did not alter their programming packages. I don't know, the more people who say this service is going to die, the better it seems to get for me.

They also added Program/Tuning Info to the STB for distant local digitals in surrounding markets (like RNN and TBY from Poughkeepsie)

Ahh, now if only the starz people couod re-consider their premature snuff-out of EncoreHD.

VOOM 4 EVER!

[dkennedy]

Dolan to FCC: Block Deal with EchoStar

By Ted Hearn 3/29/2005 6:13:00 PM

In another strange twist in the Voom saga, Cablevision Systems Corp. chairman Charles F. Dolan Monday asked federal regulators to block the transfer of direct-broadcast satellite spectrum from Rainbow DBS to EchoStar Communications Corp.

Dolan, joined by a group called The Association of Consumers to Preserve and Promote DBS Competition, asked the Federal Communications Commission to reject the deal on the basis that it would conflict with long-term agency competition goals.

Dolan and his allies said EchoStar’s acquisition of the satellite assets “would undermine” competition in the pay TV market and clash with “well-established” FCC policies of “fostering competition and new entry among DBS service providers.”

The filing stated that Voom HD was in the process of obtaining $400 million in financial commitments in an effort to purchase the satellite frequencies included in the transaction “should they once again become available in the market.”

Dolan’s filing said the EchoStar deal would harm competition because it “would result in a loss of service to the approximately 40,000 existing subscribers to the Voom DBS service.”

Cablevision first agreed to sell its “Rainbow 1” satellite to EchoStar in December for $200 million as part of a plan to eventually shut down the Voom service. But after pressure from Charles Dolan, Cablevision relented in February, agreeing to allow Dolan to continue to run the service and giving him until the end of March to secure funding.

It is estimated that Voom will need $1 billion-$1.5 billion to fund operations over the next few years.

Mike Farrell contributed to this report.

[dkennedy]

D-Day for Dolans

With decisions due tomorrow on West Side and Voom, it's a crucial time for Cablevision father and son who don't see eye to eye

BY HARRY BERKOWITZ AND MONTY PHAN
STAFF WRITERS

March 30, 2005

Two years ago, Cablevision chief executive James Dolan labeled himself the "dutiful son." His role was to carry out the strategies set by his father, chairman and founder Charles Dolan, he told an interviewer.

Whether that meant deciding to sell the Bravo cable channel to NBC or rolling out the company's digital cable service, Dad supposedly called the shots.

But all that has been shaken up in recent weeks. Now it is the combative son who has stepped out front, especially in two major disputes that will come to a head tomorrow: one with his own father and one with the Jets and Mayor Michael Bloomberg over a proposed West Side Stadium.

The two decisions could set the outcome of those disputes and determine to what degree James Dolan, and Cablevision, emerge from the father and founder's shadow.

"I just think it's his coming-out period," said Miramax co-founder Harvey Weinstein, a friend of James Dolan's.

In one decision tomorrow, the Metropolitan Transportation Authority is to announce whether Cablevision, the Jets or longshot energy concern TransGas will get to develop a 13-acre site on the West Side of Manhattan.

Tomorrow also is the day an agreement expires between Charles Dolan, 78, and the board of directors to keep alive the Voom high-definition satellite TV service, which his son wants to kill as Charles Dolan tries desperately to take it off the company's hands.

"This has made it clear for the first time that Jimmy Dolan is doing more than just dancing to his father's tune, that he is, in fact, exerting leadership at Cablevision," said Craig Moffett, an analyst at investment firm Sanford C. Bernstein.

Charles Dolan is not making it easy for his son. This week, in defiance of the board and his son, he joined with a consumer group to file a petition with the Federal Communications Commission to block the sale of the sole Voom satellite to EchoStar Communications - a $200-million deal James Dolan, 49, signed in January.

On top of that, Cablevision is now weighing whether to seek a merger with bankrupt cable operator Adelphia Communications - thereby thwarting the plans of media giants Time Warner and Comcast to buy it.

Those decisions and their aftermath will test James Dolan's highly emotional and confrontational style. His methods are in sharp contrast to his father's more mannerly and reserved approach, and have included a head-to-head public struggle with Bloomberg, who backs the Jets stadium. His father apparently has not opposed the battle, but James, who took over as chief executive in 1995, has shaped it and fought it loudly and publicly.

"It's very hard to believe these guys are father and son," said a former media executive who has sat across the negotiating table from both. "Jim is a table pounder and far more emotional than his father."

The Voom decision will help determine what future role the elder Dolan plays in the company he created three decades ago and whether the younger Dolan can live up to a vow he made to Wall Street analysts 15 months ago that Cablevision will stop veering off on risky and expensive tangents.

In the past, James Dolan was linked most often to Cablevision's ill-fated acquisition of The Wiz retail electronics chain, which was liquidated after losing hundreds of millions of dollars.

The father and son have been feuding for months over Voom, which lost $661 million last year. Ironically, Wall Street analysts and many cable industry executives are calling James the hero of the Voom saga, even though for years they considered him an unworthy successor to his father.

"His success in founding HBO and Cablevision has led most investors to think Chuck Dolan was really the brains behind the throne ... ," Moffett said. "But in Voom, Jimmy is giving appropriate weight to public shareholders' interests in preventing continued losses."

The Voom battle pales in comparison to the war between Cablevision and the Jets, whose proposed $1.9-billion stadium project poses a competitive threat to the company's Madison Square Garden.

By bidding for the site with a proposal to build a residential and park complex, Cablevision has at least complicated the Jets' bid. "It has been a cunning move to make the process more competitive," said UBS analyst Aryeh Bourkoff. "But it does expose the company to ventures outside of its core competency of cable TV and networks. Jim Dolan has raised the stakes for everybody."

Moffett said Dolan's bet on the West Side holds more dangers than his Voom stance. "In the West Side stadium project, it is less clear whether his hardball tactics will pay dividends," he said. "Jim Dolan has potentially irreparably damaged Cablevision's relationship with the mayor's office ... "

Even if James Dolan is on the right side in the Voom and West Side struggles, analysts ask why those issues had to reach the crisis point.

In an interview with USA Today, Dolan said that, as CEO of a public company, "you don't bet the farm" on a venture like Voom, but noted that it was hard to defy his "entrepreneurial father."

As for the Garden, the Jets domed stadium would threaten it "in a way that nothing else does," Dolan told New York magazine, "and if we had not started shouting about it, I'm telling you, that thing would be being built right now."

Moffett said that a good CEO needs to be effective in corporate peace as well as war, and it is not clear Dolan can do both. Madison Square Garden, where Dolan is chairman, "is a gem of an asset that has dramatically underperformed," Moffett said.

On the other hand, after years of big spending and some missteps, Cablevision's core businesses are performing well, thanks in part to chief operating officer Tom Rutledge, whom James Dolan brought in from Time Warner Cable.

"You have to give him very high marks for bringing in Rutledge, and then doing the right thing by giving him enough leash to run the business," Moffett said.

[dkennedy]

New effort to save Voom

Charles Dolan moves to shrink Cablevision's board and oust 3 more who ordered him to shut satellite service

BY HARRY BERKOWITZ
STAFF WRITER

April 1, 2005

Cablevision Systems chairman Charles Dolan plans to oust three more directors who had ordered him to shut the Voom satellite TV service that he is trying to rescue, the company disclosed yesterday.

The disclosure came on the same day that the board's interim agreement to extend the life of Voom expired. The satellite venture's uncertain fate has sparked an enormous feud between Dolan and his chief executive son, James, who wants to kill it.

Despite the agreement's expiration, the board did not meet yesterday to resolve the three months of turmoil. The company did not say whether the board would meet today.

On Monday, in an extraordinary action that defied the board, Dolan asked the Federal Communications Commission to block Cablevision's deal to sell Voom's sole satellite to EchoStar Communications for $200 million - a deal signed by James Dolan in January. Charles Dolan also personally pledged $400 million to resuscitate Voom.

If Voom is not immediately ordered shut, the planned further shakeup of the board could give Charles Dolan greater sway in determining the satellite service's fate, possibly enough to force Cablevision to hand Voom over to him.

But without the satellite that is being sold to EchoStar, which is not willing to alter the deal, it is not clear how Dolan could keep Voom operating, and analysts do not expect the FCC to side with Dolan.

Dolan and his son Tom, Voom's chief executive, have refused to shut the service, which has attracted only 40,000 subscribers, had $661million in losses last year and is given little chance of success by analysts and several board members.

The Cablevision disclosure included a letter written by Dolan to the board on Tuesday, informing directors that he plans to reduce from six to three the number of them who are approved by public shareholders - rather than by him - at an April 18 meeting. All six public-shareholder directors were among those who had ordered Voom shut.

Dolan said the six current public-shareholder directors would nominate three for the new board. He had indicated earlier that he would exercise his right to name 75 percent of the board.

Dolan's plan would shrink the board from 15 to 12 members - nine chosen and approved directly by him and three approved by public shareholders.

Early last month, Dolan ousted three board members who had ordered Voom shut and hand-picked five new ones: son-in-law Brian Sweeney, who is Cablevision's senior vice president for e-media; Liberty Media chairman John Malone; former Viacom chief Frank Biondi; former ITT chairman Rand Araskog; and cable pioneer Leonard Tow.

In the new letter, Dolan said he believes the four outside executives would qualify under New York Stock Exchange and Securities and Exchange Commission "independence" requirements to serve on the board's audit and compensation committees.

The current members of those committees are public-shareholder directors Victor Oristano, who signed a letter early last month warning Dolan to stop soliciting new Voom subscribers; former New York State economic development director Vincent Tese; former Chase Securities managing director Thomas Reifenheiser; and Vice Adm. John Ryan. Regent Capital Management chairman Richard Hochman and law firm partner Charles Ferris are the other public-shareholder directors.

Copyright © 2005, Newsday, Inc.

[dkennedy]

Just a thought....why can't VOOM become a premium service ala HBO, Showtime, etc...? They can sell the HD programming to the satellites and cable companies and wont have to worry about having their own bird in the sky...

[dkennedy]

Cablevision disavows Dolan

BY HARRY BERKOWITZ
STAFF WRITER

April 2, 2005

In the latest move in a convoluted corporate chess match, Cablevision Systems Corp. has disavowed a federal filing in which chairman Charles Dolan seeks to block the company's deal to sell a satellite to EchoStar Communications.

Dolan needs the satellite to rescue the company's Voom TV service, which he refuses to shut despite board pressure and despite the $200-million deal signed in January by his chief executive son, James, to sell the satellite.

A Cablevision law firm told the Federal Communications Commission in a filing that the company had not authorized Charles Dolan to file a 53-page challenge to the sale on Monday and disavows his action.

The company said Dolan's claims, which include that the satellite sale would be anti-competitive and hurt consumers by shutting the satellite TV service, are all without merit.

If Cablevision had not disavowed its chairman's filing, it could have left itself open to a lawsuit by EchoStar, which has said it was "perplexed" by Dolan's action.

Thursday, the day the board's interim agreement to extend the life of Jericho-based Voom expired, Dolan met in Colorado with EchoStar chairman Charlie Ergen, who continued to refuse to alter the deal, the trade publication Satellite Business News reported.

For the second day yesterday, Cablevision refused to comment on whether the board is giving Dolan more time to seek a rescue plan or whether he is continuing to personally help fund Voom in the meantime. He had put up $10 million of his own cash and Cablevision stock to help fund it in March and has pledged $400 million to buy the satellite and help resuscitate Voom.