Dolans set to give Cablevision a trim and Spin-off VOOM

[Sean Mota]

Source

By PHYLLIS FURMAN
DAILY NEWS BUSINESS WRITER

Cablevision CEO James Dolan is planning to spin off satellite TV biz and sell cable programming units.

Cablevision's Dolan clan is ready to roll again.
After eight months in limbo, the Cablevision bosses are planning to move ahead with a spin-off of their Rainbow satellite TV and cable programing units now that an internal investigation into Cablevision's accounting is complete.

The cable giant also revealed in a federal filing that it will have to reduce two years worth of profits by about $30 million.

With the internal investigation complete, the SEC is expected to close the books on its probe. That would pave the way for Cablevision's long-planned Rainbow spin-off, which will include its cable nets AMC, IFC, and WE.

Wall Street's anxious for the Dolans to cut loose their satellite TV business, called Voom, because it's a big cash drain, costing the cable giant hundreds of millions of dollars.

Investors are wary of Cablevision's attempts to compete with satellite TV giants DirecTV and EchoStar, because Cablevision is late to the game.

"We've been waiting for Cablevision to get rid of the satellite business for years," said Andy Baker, director of research at Cathay Financial.

Once the SEC gives its green light, Cablevision will be able to refinance its loans, which could amount to savings of $75 million a year, according to Fulcrum Group media analyst Richard Greenfield.

Greenfield also expects Cablevision to sell off its nonNew York sports cable channels to Fox and Comcast.

In the long run, all these moves would make Cablevision far more appealing to a buyer like Time Warner, which could combine its Time Warner Cable unit with Cablevision's desirable New York area cable systems.

"Assuming the chain of events above occurs, it will leave the remaining Cablevision a far simpler entity, and in our view increases the likelihood that Cablevision will be acquired," Greenfield wrote in a report.

Cablevision shares rose 21 cents yesterday to $22.95.

 

[madpoet]

Hrm... well, it could be good news or it could be bad news.

 

[Scott Greczkowski]

Except for the terrible VOOM box, I am starting to really like VOOM.

I may have to buy some VOOM stock after they are sold off.

Lets just hope they keep people like Wilt and Jeff on Staff at VOOM, these guys are top notch!

 

[dledeaux]

Well shoot

E* would be the most logical purchaser with Echostar 3 at 61.5. Existing hi-def customers wouldn't even need to re-align their dish.

But with all the trouble I went through trying to get an 811 receiver (and never actually succeeding) ...

 

[platinum]

Why does everyone assume E* is the more logical purchaser? Rupert has got some very deep pockets and doesn't want E* with a HD advantage i'm sure.

 

[rang1995]

a spinoff dosn't mean a buyout,although it can be a takeover eventually.It can run as it's own entity and get financining by itself.or easily partner up with others.have to wait and see

 

[traxxs]

Does this mean the end

http://www.nydailynews.com/03-17-2004/business/story/174258p-151796c.html

 

[madpoet]

If you'll note, it's already been posted here

 

[traxxs]

sorry missed the thread

 

[Tarmack]

a spinoff dosn't mean a buyout,although it can be a takeover eventually.It can run as it's own entity and get financining by itself.or easily partner up with others.have to wait and see

Spins.

Something I know about after flying for a living for 32 years.

Pretty hard to spin something off after it has already been spun into the ground.

What you have then is just a bunch of pieces laying around...none of them working together. Usually a salvage company comes in and picks up the pieces for little or nothing.

Course I would be sorry to see ol "kfried" stuck with his 4 boxes. Grin.

 

[rang1995]

"Does this mean the end "
No--plans are to spin it off with some other assets of Rainbow media,so it can be an ongoing company,or may merge..but it's not going belly up

 

[Ilya]

Spins.
Pretty hard to spin something off after it has already been spun into the ground.

C'mon! Their biggest investment - the Rainbow-1 satellite is spinning well! And far from the ground
And except for yesterday's service problems seems to be doing fine!

 

[mike123abc]

It still seems like a hair brained idea to spin it off at this time. I wonder what shareholders are going to think when some of the biggest money makers (the cable channels) are spun off to support the giant cash sink (VOOM).

It seems too early, should have a million or so subs and a plan to reach break even cash flow. Doing now looks like they are just trying to dump it before it gets too bad.

 

[Sean Mota]

Remember that AMC, IFC and WE will be given to VOOM. These also generate $$ since every DBS and Cable Company carry these.

 

[mike123abc]

Remember that AMC, IFC and WE will be given to VOOM. These also generate $$ since every DBS and Cable Company carry these.

That is the problem. Imagine you are a Cablevision share holder. You see this giant cash sink hole and you want to see Cablevision get rid of it. You do not want to also see the real money makers of the stock you have flushed down with it. I would be mad as a shareholder to see valuable assests of the company I held being spun off like that.

 

[rang1995]

spinning it off was always in the plans,and well written about on wall street

 

[Seanb61]

Voom in the News

BY HARRY BERKOWITZ
STAFF WRITER

March 18, 2004


Five months after launching a nationwide satellite TV service, Cablevision Systems Corp. is about to take the training wheels off Voom.

But doubts remain about the service, which stresses high-definition programming.

Voom, which extended a free-trial program by two months as it battled technical problems and programming gaps, will begin charging its original customers a monthly subscriber fee April 1.

In another change, instead of charging a hefty $749 for the required equipment, as it did originally, Voom has begun offering a satellite dish and set-top box for $9.50 per month.

And next month, Cablevision plans to file regulatory documents to spin off Voom, along with three of the company's Rainbow Media cable channels including AMC, as a separate company with its own stock.

But Voom, which ran behind in making deals to carry such key channels as CNN, CNBC, HBO and Bravo, is still missing some of the most popular ones.

Those include ESPN, Fox News, USA, Lifetime, Sci-Fi, Food Network and Home & Garden TV.

"The major holes that were missing from our lineup have been filled with the exception of ESPN," said William Casamo, executive vice president at Voom. "We are in discussions with ESPN and we hope to have it on shortly."

The incubation period has not been easy or cheap.

By the end of last month, Voom signed up only 1,627 customers. Its satellite competitors, DirecTV and EchoStar Communications, have a combined total of more than 21 million subscribers and each adds more than 300,000 per quarter.

"Bringing down the up-front cost to essentially zero on the equipment fee has addressed the number one concern that people had," Casamo said.

Voom, which charges subscribers $40 or $80 per month for basic lineups, depending on the number of regular and high-definition channels, also ran into problems with the operation of its satellite receivers and installation of over-the-air antennas on homes, which receive the high-definition signals of local stations.

Casamo said Voom has made "major improvements in the stability" of the set-top boxes by zapping down software fixes from the Voom satellite and installers are getting better at putting up the digital antennas.

Voom also has stepped up advertising, including two spots in the Academy Awards show.

Without any subscriber revenue, Voom, which has been creating its own high-definition channels and a national news network with five regional bureaus in New York, Los Angeles, Chicago, Miami and Dallas to set itself apart, chalked up an operating loss of $55 million in the fourth quarter of last year. It has a total of 35 HD channels.

This year, Voom, based in Jericho, expects $399 million in investment costs and operating losses, according to Cablevision's annual financial filing.

"The principal challenge for this business is to attract a sufficient subscriber base to reach and exceed a break-even point and to do so with subscriber acquisition and other costs that are within its funding capabilities," Cablevision's filing said.

Wall Street analysts are happy Cablevision is splitting Voom from the company but have doubts about the service.

"I don't see how this has a remote chance of succeeding," said Bob Scherman, publisher of Satellite Business News. Morgan Stanley analyst Richard Bilotti, however, predicts Voom could attract about 1.2 million subscribers by 2006.