The 78-year-old cable tycoon Chuck Dolan is spending his first $10 million to break up his entertainment empire so he can build another new version of TV.
Industry watchers believe the breakup could be just weeks away, and involve his sprawling cable-TV Cablevision Systems and entertainment-sports assets, including the Knicks, Madison Square Garden and landmark Radio City Music Hall and its famed Rockettes.
The patriarch’s first step in the transformation came two weeks ago when he sold a big chunk of the Dolan family trust shares for nearly $9.7 million to help raise the $10 million for launching his plan.
The company said those millions will be used to keep alive the struggling framework of Dolan’s dream – the high-definition TV service known as Voom.
It had been losing so much money – up to $640 million – that Dolan’s son Jimmy tried to shut down the service, but instead enraged his father.
The elder Dolan fired three directors and appointed his son-in-law, Brian Sweeney, 39, to the board to help pave the way for his vaunted high-tech vision. That vision was the subject of scorn decades ago when he gambled big and won in cable television despite his detractors.
Cablevision yesterday disclosed in regulatory filings that the $10 million would come from selling Class A shares and cash, and possibly the valuable Class B super-voting shares that Dolan uses as a club to control the empire.
The elder Dolan also has put media titan John Malone on his board, which gives Malone a front-row voting seat – and a prominent voice as an acquirer – on the future of the far-flung Cablevision assets.
“This is essentially a pre-fab merger,” said one investment banker familiar with the situation.
Chuck wants to buy the ailing Voom operations from the company, and has agreed to keep it going for another three weeks – or until March 31 – when financing could be arranged to buy it.
Dolan has assigned another of his sons, Tom, as the point man to guide the Voom acquisition to the sale. Some speculate Malone and other investors would put up a significant part of the purchase price, and Dolan would borrow against his powerful Class B shares to raise his portion of the deal.
By borrowing on the Class B shares instead of selling them outright, Dolan would be able to retain super-voting power of the shares.
The $10 million backstop payment for Voom could be paid back to Dolan’s family trust by an acquirer or else converted to equity in the new TV venture.
In any event, the filing made yesterday specifically excludes the 30.6 million Class B shares controlled by the company patriarch.
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Daddy Cablebucks
Cablevision Chairman Chuck Dolan pledged $10 million of his own cash and stock to fund his troubled Voom satellite service until the end of March.