This is a copy of the memo:
MEMORANDUM
TO: All Cablevision Employees
FROM: Charles Dolan and James Dolan
DATE: June 20, 2005
RE: Dolan Family Group Offer
We are sending this memo to let you know about potential developments regarding the financial structure of the company.
As you now know, yesterday, on behalf of our family entity known as the “Dolan Family Group,” we sent to Cablevision’s Board of Directors a proposal to acquire all of the company’s cable and elecommunications businesses. Our objective is to purchase the outstanding public shares and, subsequently, operate these businesses as a private company. The offer also calls for creating a new public company, Rainbow Media Holdings, which would be a pure content business and would include all of Rainbow, with our four national cable networks, our regional sports networks, and News 12, as well as MSG, with its teams and businesses including Radio City.
We firmly believe this action is in the interest of our investors and employees and will be the best way for both Cablevision and Rainbow to realize their full potential as businesses. As you know, the cable and telecommunications business has entered a new and challenging era,with emerging technologies and aggressive competitors redefining content delivery. In this fiercely competitive environment, we feel strongly that having the flexibility to manage for the long term with an entrepreneurial philosophy is critical for success. As a private company, Cablevision will be able to operate without the constraint of the public market’s tendency to focus on short-term results. And we are confident it will succeed. At the same time, Rainbow will be a focused, well-capitalized content company with premier sports and entertainment assets poised for continued growth. We have long believed that the value of these scarce assets has not been fully reflected in Cablevision’s current share price, and that the value would be more readily recognized as a separate company. Our cable networks have achieved significant growth over the past several years and are well-positioned to continue on this path. And we operate two of the world’s finest sports and entertainment venues – MSG and Radio City Music Hall – with sports teams that are among the most valuable assets in their respective leagues.
If the proposal is approved and completed, Jim Dolan will serve as chairman and CEO of Rainbow and as a director of Cablevision while Charles Dolan will become chairman and Tom Rutledge will become CEO of Cablevision. The Dolan family would own 100% of Cablevision and a controlling interest in Rainbow. We believe that it is important to understand that controlling ownership of both entities would remain, as it always has been, with the Dolan family and this represents stability going forward – even though the financial structures would change. Since its inception, Cablevision has been a family-controlled company. In fact, for the first 13 years, Cablevision operated as a private company that grew and thrived before going public in 1986. It is also important to note that the core operations of the company will need to function as they currently do and thus we will need virtually the same workforce as we move forward. The attached press release describes the terms of the proposal more fully. We expect that the Board of Directors will appoint a committee of independent directors to review the proposal to ensure that it fully serves the interests of shareholders. We plan to pursue this transaction only if the Independent Committee approves it.
We recognize that you may have questions as a result of these proposed changes. Although there are regulatory restrictions on what we are allowed to say, we will do our best to provide as many answers as possible as soon as we can. In the meantime, we want to thank you in advance for focusing on your jobs with the energy and dedication that has made Cablevision a great company, and invite you to join us as we look forward to the growth and opportunity that lies ahead. 