The idiot weighs in (basically copying the work of others)
News Analysis
Voom Gets a Reality Check
Media mogul John Malone expresses doubt that a third U.S. satellite TV service can survive.
By Phillip Swann
Washington, D.C. (March 14) -- Maybe now Charles Dolan will wake up from his dream. A dream that has been a nightmare for his company, Cablevision.
In recent weeks, the Cablevision chairman has turned his company upside down in an effort to continue its satellite TV service, Voom. Dolan persuaded Cablevision to launch Voom in October 2003, but it has failed to generate more than 50,000 subscribers despite a lineup of approximately 40 High-Definition TV channels.
Cablevision's board has tried to close the struggling service, but Dolan removed three members and replaced them with his allies. He is asking the newly formed board to sell Voom to a private group which he is heading. Dolan has even suggested he will sell his sizable stake in Cablevision to raise money for the deal.
John Malone, chairman of Liberty Media, and one of the three people just named to the Cablevision board by Dolan, has reportedly been interested in partnering with Dolan on Voom. However, in an interview today with Reuters, Malone expressed doubt that a third satellite TV service can succeed in the United States.
Voom is now competing with satellite mainstays, DIRECTV and EchoStar.
"We were offered on a number of occasions an opportunity to participate in a third satellite competitor and we declined because we didn't think the risks were warranted by the potential returns," Malone told Reuters, referring to proposals to Liberty Media to launch or partner with a third satellite TV service.
Malone wouldn't completely rule out the possibility that Voom could succeed, but he said the "window is closing for them. They may be able to squeak through it. They may find an existence as a subset of one of the two major distribution systems."
Malone is suggesting that EchoStar or DIRECTV could buy Voom and make the service part of its overall operation. I agree with Malone that is the only way that Voom can survive.
As I stated in October 2003, when Voom was first launched, there is simply not enough room for three satellite TV services in the United States. DIRECTV and EchoStar have built well-oiled marketing machines that will gobble up nine out of every 10 potential satellite customers, if not all 10.
Some Voom enthusiasts have said recently that new management and funding could change that scenario. However, it's an absurd argument.
Cablevision has already spent more than $1 billion on Voom. It's hard to envision that Dolan and even the incredibly wealthy Malone could spend more than that. And, even if they did, why would the results be any different? As Cablevision's chairman, Dolan has already been, in effect, the head of the satellite service. Voom won't suddenly generate more subscribers just because he starts a new company to run it. It's the irrational thinking of someone who just won't let go.
In the Reuters interview, Malone appears to be telling his old friend that it's time to pack up and call it a day.
"It seemed like I might be helpful in terms of settling things down for him," Malone said when asked why he agreed to Dolan's request to sit on Cablevision's board.