Pali Research analyst Rich Greenfield Friday voiced pleasure about the demise of Voom HD, which he described as the “ill-conceived” brainchild of Cablevision Systems Corp. chairman Charles Dolan.
Cablevision’s Rainbow Media Holdings unit Thursday lowered the boom on Voom HD, shuttering the domestic operations of its beleaguered suite of 15 HD networks. But it almost seemed like Voom HD was doomed from the get-go.
In a report titled “We Can Finally Forget About Voom,” Greenfield wrote, “We are pleased to see CVC [Cablevision] management acting in the best interest of shareholders, with Jim Dolan putting the final nail in Voom’s coffin….remember, Chuck was also the primary driver of the ill-conceived Voom DBS plan.”
Rainbow blamed the demise of Voom HD on the actions of its partner in the venture, Dish Network, which was the suite’s largest distributor until it dropped the HDTV networks in a contract dispute in May.
That prompted Voom HD to sue Dish Network, seeking $1 billion in damages for what it claimed was Dish’s violation of a 15-year carriage deal, a charge the satellite provider denies. That suit remains mired in the courts, and will be for a year or so, which was one of the reasons Rainbow CEO Joshua Sapan cited for pulling the plug on Voom HD.
But consultant Bruce Leichtman said that Voom HD’s overriding problem, regardless of Dish Network, was that it was launched when there was a void of HDTV networks that needed to be filled, but few HDTV subscribers.
Now, while there are more viewers with HDTV sets, there are also dozens of high-def versions of branded cable networks, such as ESPN HD. Those branded HD networks hold more of an allure to viewers than the Voom channels, which include services such as Monsters HD and Gallery HD, according to Leichtman.
He said that while “it is true that Dish is the precipitous event” that lead to Voom HD’s demise, the service’s real problem was “what is the value of lesser-known content?”
Dish Network declined to comment Friday.
Voom HD now has with only one U.S. distributor, Cablevision, which said it will replace all the Voom HD services, reportedly in late January when they go off.
In a memo to employees, Sapan said, “Voom's domestic business was made possible through an affiliation agreement between Rainbow and EchoStar [now named Dish Network], which was established in 2005. Unfortunately, earlier this year, a significant legal dispute arose with EchoStar….Unfortunately, as we analyzed the opportunities and challenges in the current environment and the lawsuit, it became clear that we can no longer operate Voom domestically.”
Voom HD evolved out of Rainbow DBS -- a satellite TV service that included Voom’s HD networks – that launched in July 2003 and was Chuck Dolan’s idea and pet project. Cablevision CEO James Dolan, however, opposed the service, and convinced the company’s board to vote to close it in 2005.
But shortly before the service was set to go off the air, EchoStar did a deal to buy Rainbow’s satellite for $200 million, and committed to carry the Voom HD suite in exchange for a 20% stake the HD service.
“Having content that’s known always wins first out,” Leichtman said. “But let’s remember that it started as a service, not as just programming. So the whole premise was heavily challenged from the start.”
In court documents earlier this year, Voom HD said it had invested more than $300 million on the HD service.