Cablevision family showdown leads to VOOM satellite sale to EchoStar

Echostar Communications has purchased the satellite business for $200 million in cash
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A father-son showdown in the family that controls Cablevision has ended with the son outmaneuvering the father and persuading directors to vote to sell the company’s troubled VOOM satellite business to Echostar Communications for $200 million in cash, the New York Times reported.

During a hastily scheduled meeting last week, the directors sided with James L. Dolan, the 49-year-old chief executive and the heir apparent, against his father, Charles F. Dolan, the 78-year-old founder and controlling shareholder of Cablevision. The father, who founded HBO, wanted to keep Voom. The son wanted to sell.

The meeting appeared to have been prompted by outside directors who were concerned about the satellite company. Several independent directors were concerned about the possible legal implications of supporting VOOM despite its losses and criticism on Wall Street. Problems at the company had become so noticeable that even longtime family supporters had started to oppose the project.

The service has 26,000 subscribers and has about $76 million. When Cablevision recently canceled plans to spin off VOOM and its Rainbow Media group, it said it would “pursue strategic alternatives” instead.

After the sale to EchoStar, the company said it would continue to provide the service to its current customers during a transition period, but did not elaborate on what would eventually happen to them.

Under the terms of the deal, EchoStar will pay $200 million in cash for Cablevision’s satellite, called Rainbow 1, as well as federal licenses to construct, introduce and operate satellite services over 11 frequency channels. In addition, EchoStar will buy the company’s ground facility in Black Hawk, SD, and related assets.

EchoStar, which operates under the Dish brand, said it was going to assess how the Rainbow satellite’s flexibility can best be utilized to enhance the Dish Network’s existing service.

Cablevision, based in Bethpage, NY, said it would continue to explore strategic alternatives for its remaining Rainbow DBS-related assets, including programming, equipment and spectrum.

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