Late last year, James Dolan, the CEO of Cablevision and corporate overlord of the Knicks, Rangers, and Madison Square Garden, had his hands full battling Mayor Bloomberg’s plan for a football stadium when he was confronted with an even tougher task. It was probably the hardest thing he’d ever faced in his professional life. He had to personally tell his 78-year-old father, the estimable Charles Dolan, the company founder and chairman and a pioneer of the cable-television business, that as CEO, he could no longer support his beloved satellite offshoot and that it would have to be sold or terminated.
The idea behind the venture, called Voom, had been to catapult Cablevision, a regional firm with 3 million subscribers, into the futuristic world of satellites, where no customer is out of reach. To Chuck, it was to be the crowning achievement of a storied career, perhaps his last hurrah. No son would wish to stand in the way of such a thing, certainly not one who, at the age of 49, lives next door to his father and calls him Dad around the office.
On the 26th floor of 2 Penn Plaza, high above Madison Square Garden, Jim Dolan struggled to describe this strange and agonizing set of circumstances. Dolan does not, as a rule, speak to the press. He is excitable, prone to outbursts and tantrums, and he’s smart enough to know that doesn’t play well in the media. But he agreed to explain how he had entered into a predicament that may cost him his company. This is the first time he has spoken about his winter of discontent.
He is not in a personal war, he insists. It’s merely a difference of opinion among honorable businessmen who happen to be father and son. The satellite is not a bad idea, it’s just that there are already two other satellite-TV services, and competing with them is insanely expensive. “I was never a big fan, from day one, of the satellite project,” says Jim, “and Dad’s always known that. But I don’t have to be a fan of everything the company does. I just need to make sure we’re doing the best job we can, and he and I both relied on that up until this point, and we never had any problems with it until then.”
For years, Jim and the board indulged Chuck’s satellite dream; in 2003, father and son had even gone down to Cape Canaveral to watch the launch together. But in its first full year of operation, Voom had blown through $660 million, and an analysis showed no relief in sight. In the old days, that sort of bleeding might have been tolerable, but in the post-Enron/WorldCom era, board members have to be extra careful. They had received a legal opinion that they could be personally liable to shareholder lawsuits if they didn’t pull the plug.
“At some point in December,” says Jim, “I had to tell him, ‘Look, I can’t vote for this anymore.’ ” How did his father take the news? “He wasn’t happy,” says Jim flatly, as if trying to shake the memory of a bad dream.
In January, the board authorized the sale of the satellite, the Rainbow I, to EchoStar, and Chuck was later given until the end of February to come up with a plan to buy Voom’s remaining assets. It left him furious, and with few options. Chuck’s two other sons on the board, Patrick and Thomas (who runs Voom), sided with their father; Jim and several erstwhile loyalists on the board did not. According to Leo Hindery, a former Cablevision board member, Chuck was “devastated. He went down to Florida with his wife to think about things. He was either going to retire, or come back fighting tooth and nail.”
To the surprise of nobody who knows him well, Chuck Dolan came roaring back. He asked for more time to come up with a financing scheme, but the board stuck to its guns and the original deadline passed. Then he invoked his powers as a special shareholder to rid the board of key Voom opponents, like the financier Steve Rattner, and replace them with supporters, including his son-in-law. He hastily put up his own Website as counterpoint to the official Cablevision site. He was, in a sense, attempting a hostile takeover of his own company.
All of this has the ground moving beneath Jim Dolan’s feet. Who does he work for? His father or Cablevision? There never used to be a difference. Now there are periods when Jim and his father hardly speak. And Jim believes there’s nothing he can do about it. “As my father’s son, I want what my father wants,” he says. But as CEO, he has other obligations. “To be honest,” says Jim, “I don’t have a lot of options.”
“In New York City, if you want to choose ‘What can I do to cause controversy every day?’ it’s No. 1, run a cable company; No. 2, own a sports franchise; No. 3, tangle with the mayor,” says Harvey Weinstein, a friend of Jim’s. “And in the middle of all this, the biggest battle is with his dad. It’s a defining moment for Jim. He isn’t in the shadow anymore. This is his coming-out party, although I don’t think he wants this party.”
It has been a decade since Jim Dolan was installed by his father as the CEO of Cablevision. Though the stock is publicly traded, the Dolan family exerts control through a special class of shares, and until recently tended to do as it pleased. The Dolan family holds $1.5 billion of Cablevision stock; according to a recent Securities and Exchange Commission filing, over the past fourteen months, Jim has taken home a salary and bonus totaling $9.5 million, while his father has made $6.8 million.