TV'S VOOM SOUNDS MORE LIKE SPUTTER
By HOLLY M. SANDERS
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August 8, 2004 -- It's been nine months since Chuck Dolan and his company, Cablevision Systems, gambled big on high-definition television. Tomorrow, investors will get a glimpse at how that bet is paying off.
Early indications say they won't be happy.
Since launching its Voom HDTV satellite service in October, Cablevision has struggled to satisfy critics of the startup. Voom signed a disappointing 8,000 subscribers as of April and lost $54.8 million on sales of $1 million in the first quarter.
Analysts don't expect this quarter's results, which will be announced tomorrow, to mark a turning point.
The bright spot for investors is Cablevision's plan to spin off the project. The question for Dolan is whether Voom can survive on its own.
"The biggest risk by far is the financial commitment," said Sean Badding, a cable and satellite analyst for the Carmel Group. "It's a nascent market. It's trying to run up the learning curve and get consumers to understand what HDTV can do for them."
Dolan has said in the past that Voom needs about $2 billion of investment and 1.5 million subscribers to break even.
After a track record of successes that includes starting premium pay-channel HBO, Dolan is forging ahead with Voom.
Cablevision signaled last week that the spin-off is imminent by announcing the sale of $800 million in bonds to finance the venture. The company guaranteed that, beyond that financing, the venture will not eat up more than $150 million a year and $600 million altogether.
Analysts were pleased that Cablevision won't kick in more financing for the venture, which includes the AMC, WE: Women's Entertainment and IFC cable channels.
Cablevision had spent about $600 million to launch Voom.
"Investors had grown increasingly skeptical that [Cablevision] would find the necessary financing and that CVC would be forced to put more cash" into Voom, Richard Greenfield, an analyst at Fulcrum Global Partners, said in a research note.
Voom has had some startup problems. In May, Cablevision revealed that one in five customers who tried the service had dropped it.
Subscribers may have another reason to cancel later this year when Voom will replace installed dishes with ones that are nearly twice as wide.
The bigger issue is whether Dolan can compete against satellite firms DirecTV and EchoStar, which have more than 22 million subscribers. The largest provider, DirecTV, added 455,000 U.S. subscribers lastquarter, bringing its total to 13 million. News Corp., a controlling shareholder in DirecTV, also owns The Post.
But some point out that Dolan, who has helped shape the modern cable industry, deserves the benefit of the doubt.
"Chuck is a visionary," Carmel's Badding said, "and, considering what he's done with Cablevision, you have to give him some credit."
By HOLLY M. SANDERS
--------------------------------------------------------------------------------
August 8, 2004 -- It's been nine months since Chuck Dolan and his company, Cablevision Systems, gambled big on high-definition television. Tomorrow, investors will get a glimpse at how that bet is paying off.
Early indications say they won't be happy.
Since launching its Voom HDTV satellite service in October, Cablevision has struggled to satisfy critics of the startup. Voom signed a disappointing 8,000 subscribers as of April and lost $54.8 million on sales of $1 million in the first quarter.
Analysts don't expect this quarter's results, which will be announced tomorrow, to mark a turning point.
The bright spot for investors is Cablevision's plan to spin off the project. The question for Dolan is whether Voom can survive on its own.
"The biggest risk by far is the financial commitment," said Sean Badding, a cable and satellite analyst for the Carmel Group. "It's a nascent market. It's trying to run up the learning curve and get consumers to understand what HDTV can do for them."
Dolan has said in the past that Voom needs about $2 billion of investment and 1.5 million subscribers to break even.
After a track record of successes that includes starting premium pay-channel HBO, Dolan is forging ahead with Voom.
Cablevision signaled last week that the spin-off is imminent by announcing the sale of $800 million in bonds to finance the venture. The company guaranteed that, beyond that financing, the venture will not eat up more than $150 million a year and $600 million altogether.
Analysts were pleased that Cablevision won't kick in more financing for the venture, which includes the AMC, WE: Women's Entertainment and IFC cable channels.
Cablevision had spent about $600 million to launch Voom.
"Investors had grown increasingly skeptical that [Cablevision] would find the necessary financing and that CVC would be forced to put more cash" into Voom, Richard Greenfield, an analyst at Fulcrum Global Partners, said in a research note.
Voom has had some startup problems. In May, Cablevision revealed that one in five customers who tried the service had dropped it.
Subscribers may have another reason to cancel later this year when Voom will replace installed dishes with ones that are nearly twice as wide.
The bigger issue is whether Dolan can compete against satellite firms DirecTV and EchoStar, which have more than 22 million subscribers. The largest provider, DirecTV, added 455,000 U.S. subscribers lastquarter, bringing its total to 13 million. News Corp., a controlling shareholder in DirecTV, also owns The Post.
But some point out that Dolan, who has helped shape the modern cable industry, deserves the benefit of the doubt.
"Chuck is a visionary," Carmel's Badding said, "and, considering what he's done with Cablevision, you have to give him some credit."
DirecTV is no problem. If VOOM wants to add more subscribers, they need a satellite that the west coast can see.
