Cable Operators

Voom Meets Its Doom

4/10/2005 8:00 PM Eastern

More than a week after a self-imposed deadline passed, Cablevision Systems Corp. said in a securities filing last Friday that it has begun the process of shutting down its troubled HDTV-centric direct-broadcast satellite service, Voom.

The shutdown appears to end what has been a heated battle between Cablevision CEO James Dolan and his father, chairman Charles Dolan. Last month, Cablevision said it would give Charles Dolan until March 31 to find funding to keep Voom going as a separate entity, and the elder Dolan even went as far as saying in securities documents that he was willing to commit up to $400 million of his own money to keep the service running.

But as the March 31 deadline passed with no announcement from Cablevision, some had speculated that a deal was struck between the Bethpage, N.Y.-based MSO and Charles Dolan to extend the shutdown date. The April 8 filing with the Securities and Exchange Commission appeared to end that speculation.

Cablevision said in the April 8 filing that shutdown procedures for Voom have begun, and that the service will cease to exist as of April 30, but appeared to leave the door open to continuing Voom as a programming service.

“The board of directors instructed management to continue to analyze whether its Voom 21 channels can be marketed to other satellite and cable providers as part of the company’s Rainbow programming operations,” Cablevision said in the filing.

Voom was launched in October 2003 as an alternative to the two existing DBS powerhouses — DirecTV Group Inc. and EchoStar Communications Corp. — offering subscribers 21 exclusive HD channels catering to specific genres like horror movies, extreme sports and fashion.

But the service never really caught on: It was able to attract only 46,000 subscribers in more than a year and had a high churn rate.

Voom has been losing money at an alarming rate — it lost $661 million last year alone — and in February, Cablevision struck a deal to sell Voom’s satellite (Rainbow1) to EchoStar for $200 million in cash.

Charles Dolan tried to block that sale last month, but it appears that the sale will go through now.

Whether other operators will be open to carrying the Voom HD channels remains to be seen. But Fulcrum Global Partners analyst Richard Greenfield said that MSOs may take at least some of the channels.

“There aren’t that many slots available on HD, but if they can get one or two [Voom channels], Chuck [Dolan] at least gets some value out of this whole Voom debacle,” Greenfield said.

Greenfield added that while operators in the past may have rejected carrying any of the Voom HD channels, Cablevision’s failed bid for Adelphia Communications Corp. may give it some leverage.

“The difference now is that maybe by going away, by not complicating the whole Adelphia acquisition by Time Warner and Comcast, maybe they’ll grant them some carriage to go away,” Greenfield said.