VOOM Granted Temporary Reprieve, Cablevision Saga Becomes Even More Personal

The almost comical feud going on among various members of Cablevision’s ruling Dolan family has led to a reversal -- or at least a temporary suspension -- of the company’s decision to shut down the VOOM satellite HD service by the end of March. Yesterday, Cablevision’s board agreed to grant Chuck and Tom Dolan an additional week to line up the financing to continue VOOM’s operations. March 7th is the new deadline (Feb. 28th had been the original date), and it is expected that Chuck Dolan would have to unload part or all of his controlling stake in Cablevision to be able to come up with the cash needed to fund VOOM.

The most likely explanation for Cablevision’s board’s change of heart is that Dolan fired three directors on Wednesday and replaced them with long-time friends and fellow cable moguls that are apparently much more sympathetic to his plight. Cable pioneer John Malone of Liberty Media is among the new board members, as is Leonard Tow, one of Adelphia’s largest shareholders. The elder Dolan succeeded in packing the board with supporters because as the owner of 75% of Cablevision’s voting shares, a majority of the board essentially serves at his pleasure.

So to recap, on one side there are Chuck Dolan and sons Tom and Patrick fighting to keep VOOM alive and separate from Cablevision. On the other is son James (Jimmy), Cablevision’s CEO who would prefer to see VOOM just terminated. The escalating family feud has led some observers to question how much longer Jimmy will have a job at Cablevision given the rift between him and his father the chairman.

Jimmy’s reluctance to have his father and brother Tom purchase the remaining VOOM assets from Cablevision may have more to do with self-interest than in what is good for his company and shareholders. It’s clear that selling VOOM’s assets to Chuck Dolan would relieve Cablevision of the financial burden of absorbing the millions of dollars of losses it would incur in shuttering VOOM. The company has already lost $1.4 billion as a result of VOOM over the last year, and at first glance it’s difficult to understand why Jimmy Dolan wouldn’t want to immediately stop the bleeding.

Perhaps the answer lies again in his future employment. To come up with the cash to finance VOOM’s operation’s, Chuck would need to sell all or most of his stake in Cablevision, presumably to either Time Warner (which has long coveted Cablevision as a complement to its Manhattan cable system) or Comcast. If his company were sold to either of those two cable giants, it seems probable that Jimmy Dolan would be out of a job.

For now, the industry waits to see if Chuck Dolan can come up with the cash to finance VOOM -- and he’s only got another three days to get a deal done. There’s speculation that he has talked to EchoStar about some kind of arrangement that would link the remaining VOOM assets with the satellite that Cablevision sold EchoStar last month for $200 million in cash. However, it’s unclear at this point whether that would involve combining the remaining VOOM assets into EchoStar, VOOM leasing capacity from EchoStar or VOOM buying back the satellite from EchoStar. Or maybe none of the above.

For kicks, you can check out the two competing “official” websites in the VOOM saga. There’s www.VOOM.com, the site run by Cablevision, which currently has a message stating that “Voom has ceased taking new customer orders and will shut down by the end of March.” And then there’s www.VOOMLLC.com, the site put up by Chuck and Tom Dolan, which yesterday stated that “VOOM Still Delivers,” although today it more ominously says “This site is temporarily unavailable, please check back at a later time.”