Malone Exit May Signal Interest

Jun 13, 2005  •  Post A Comment

The ghosts of Cablevision Systems’ failed satellite venture Voom reared their heads last week after the company provided further details of the costs associated with shutting down the service, and announced that a director brought in amid a boardroom battle over Voom’s fate was stepping down.

Liberty Media Chairman John Malone on June 6 stepped down as a Cablevision director, saying that his remaining on the Cablevision board would be a conflict of interest given Liberty’s and Cablevision’s respective ownership of cable channels.

Mr. Malone’s resignation from the Cablevision board has sparked speculation among some Wall Street analysts that Liberty might be interested in some or all of Cablevision’s cable channels, which have been on and off the auction block for years.

“The decision seems to suggest that Cablevision has begun, or could begin in the future, discussions to sell their … cable channels to Liberty Media, or to a Liberty-related company,” said Craig Moffett, a cable analyst at Bernstein Research.

Mr. Malone joined the Cablevision board in March amid a director shakeup engineered by Cablevision Chairman Charles Dolan. Mr. Malone was one of four board members brought on after Mr. Dolan ousted directors who went against his wishes to continue funding Voom, which failed to attract subscribers and was shut down in April.

Around the time he was elected to the Cablevision board, Mr. Malone said he joined at Mr. Dolan’s request. Mr. Malone thought he might be able to help quell the board infighting that wound up pitting Mr. Dolan against his son, CEO James Dolan. The battle over Voom eventually subsided after Charles Dolan, along with the rest of the Cablevision directors, voted in April to shut down the service.

Meanwhile, Cablevision also gave Wall Street more clarity regarding the impact of the Voom shutdown on the company. In a filing with the Securities and Exchange Commission, Cablevision said that it estimated the costs of shutting down Voom could be as high as $130 million, but those costs would be offset by the proceeds of the $200 million sale of Voom’s lone satellite to EchoStar Communications.

The filing stated that the company expects contract terminations, employee severance and other costs to total between $100 million and $130 million, but warned the final figure could be significantly more or less.