Chairman agrees to fund any costs incurred by Rainbow DBS
Cablevision Systems said Tuesday it will keep its controversial DBS service Voom up and running until March 31 as chairman Charles Dolan and his son Tom try to buy it.
“The parties will work cooperatively to finalize the separation from Cablevision of its Rainbow DBS operation,” company said. Voom will continue to provide service “while Charles and Thomas Dolan seek to arrange an alternate transaction that would avoid a shutdown.”
Charles Dolan agreed to fund any costs incurred by Rainbow DBS above what a shutdown would cost.
Announcement came after a two-day meeting of the board that has been newly stacked with Charles Dolan allies. New directors include Rand Araskog, former chairman-CEO of ITT; Frank Biondi Jr., a former top exec at Viacom and Universal Studios; Liberty Media’s John Malone; and Leonard Tow, former CEO of cabler Century Communications.
The elder Dolan, who controls Cablevision through a class of super voting stock, unilaterally named the new directors last Wednesday.
That dramatic move came after Charles lost a boardroom showdown when a majority of directors sided with his son James, Cablevision’s CEO, in opposing Voom. The board had already struck a deal in December to sell Voom’s satellite to EchoStar for $200 million.
In February the company gave Charles and Tom Dolan until Feb. 28 to come up with financing for the remaining assets, but the deadline passed with no deal.
Cablevision then agreed to let Charles and Tom present their case at this week’s board meeting — resulting in the extension to March 31.
The new directors replace William Bell and Sheila Mahony, both of whom recently retired as Cablevision execs, as well as the investment banker Steven Rattner and the late John Tatta, a co-founder of the company.
Wall Streeters have speculated that the media-savvy board members were brought in to explore a sale of the company’s assets, mainly the attractive New York-area cable system (about 3 million subs), or Rainbow cable nets IFC, AMC and WE: Women’s Entertainment.
Voom, a package of high-definition channels, has struggled since it launched in late 2003, losing $661 million last year.
Dolan had said he would ask the board to create a new seat for Brian Sweeney, a Cablevision exec who is also Charles Dolan’s son-in-law. The board made no announcement regarding Sweeney.
Cablevision also owns New York’s Madison Square Garden, the New York Knicks and the NHL’s Rangers.
Cablevision is also in the midst of a public showdown with New York Mayor Michael Bloomberg over the city’s plans to build a stadium on Manhattan’s West Side that would compete with the Garden.
Cablevision continues to blast the plan on copious local television ads and has made its own proposal for developing the land.
Cablevision shares fell 2.29% to $28.62. Stock has been volatile due to the public rift between father and son and the uncertain future of Voom.