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Cablevision sale "ever more probable"

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Voom's Future Is Uncertain

Amid Conflicting Statements


By PETER GRANT

Staff Reporter of THE WALL STREET JOURNAL

March 1, 2005 1:37 p.m.


Confusion swirled Tuesday over the future of the Voom satellite service, owned by Cablevision Systems Corp., as Cablevision's battling chairman and chief executive put out conflicting memos to employees about whether the satellite business would continue.


Cablevision chief executive James Dolan told Voom employees that the company's board has ordered that Voom will be closed. The memo states that Cablevision will help Voom employees find work in other parts of the company.



But another memo sent to Voom employees by Charles Dolan, Cabelvision's chairman and James Dolan's father, states that "members of the Dolan family remain committed" to the business and that "financing for the purchase of Voom operations is in place."


The dueling memos are the latest sign of open warfare within the board room of Cablevision as well as the Dolan family, which built Cablevision into the country's sixth largest cable operator. Charles Dolan, the company's 78-year-old founder, has been the champion of Voom, because he believes that satellite is a more efficient way of distribution television signals than cable. But James Dolan sided with a majority of board members in January who voted to discontinue Voom and sell its only satellite to EchoStar Communications Corp.


After that humiliating defeat, Charles Dolan, and another one of his sons, Tom Dolan, formed a new company that cut a tentative deal with Cablevision to buy Voom's remaining assets. But they had until Monday to finalize that deal and they were failed to do so, triggering the conflicting memos from the two camps. Cablevision also issued a press release Monday stating that Voom would be shut down.



The fighting has produced volatility in Cablevision's stock. It has risen in recent weeks on speculation that Charles Dolan, who controls the majority of a special class of stock with super voting rights, might decide to put Cablevision on the block to raise funds to finance Voom. In early afternoon trading today, Cablevision shares were down 92 cents, or 3%, at $30.14, on news that Cablevision had stopped negotiations to sell Voom's remaining assets to Charles Dolan's new company.


Volatility in Cablevision's stock will likely continue given Charles Dolan's reluctance to throw in the towel. Analysts estimate that he would need about $400 million a year to continue financing Voom, but they doubt that he would be able to find partners willing to invest in a business that many analysts feel is not viable. His most likely source of capital would be his shares in Cablevision, valued at slightly under $1 billion.


Even if Charles Dolan agrees to pull the plug on Voom, that might stop him from selling Cablevision. "Regardless of the fate of Voom, we wonder whether irreparable harm has been done to Dolan family business relations," states Richard Greenfield, an analyst with Fulcrum Global Partners. "We believe the potential for a sale of Cablevision is becoming ever more probable."
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Good let him sell, force Jimmy out and fund VOOM with the money...
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