Cablevision said Thursday that controlling shareholders including founder and chairman Charles Dolan and his son Tom Dolan inked a letter of intent to buy the parts and the debts of satellite service VOOM that weren’t acquired by EchoStar — breathing new life into the nascent service that many left for dead.
Cablevision announced the deal to sell VOOM’s satellite and some related assets Jan. 20 after an internal battle between Charles Dolan, who badly wanted to keep it running, and his other son, CEO James Dolan, who wanted it gone.
Most of Wall Street had been puzzled by the cable company’s costly sat strategy and backed James.
The assets will be housed in a new company called VOOM HD. They include the VOOM 21 high-def channels carried by Rainbow DBS, various licenses, a lease on the Rainbow 2 satellite and existing customer agreements.
It appears no cash will change hands. In exchange for the assets, VOOM HD will “assume and indemnify Cablevision against substantially all of the liabilities of the Rainbow DBS satellite business existing at the closing or thereafter incurred,” the company said.
Cablevision said the move will allow it to avoid various shutdown costs and other liabilities of the VOOM service that it would have incurred had it proceeded with its original plan to shut down the service entirely.
Cabler will still incur unspecified severance costs.
VOOM HD is trying to secure financing to keep the biz running. The preliminary deal could be null and void if it isn’t finalized by Feb. 28, Cablevision said.
“We’re pleased to have an understanding that will permit us to continue VOOM’s state-of-the-art service for its customers,” Tom Dolan said.
A committee of independent directors of Cablevision’s board negotiated the letter of intent for Cablevision. The full board must approve the transaction.