if I am right that would mean about 60+ HD channels, 200 SD channels and a full backup for each channel
Rainbow Filed form 10 yesterday....big news!
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It's not clear to me what they are talking about here -- the 16 transponders they'll have as of January 2005, the 19 they'll have as of January 2006, or potentially all 24 by January 2007.
There's nothing that would prevent them from using MPEG-4 or WM9 on AMC-6.
Keep in mind that the transponders on AMC-6 do not offer nearly the power of those on the Rainbow1 satellite (double power mode). Even though the FSS transponders at 72 degrees are larger at 36MHz each, they'll probably still net considerably less in bandwidth. VOOM might get ~36Mbps (26000 QPSK @ 3/4 FEC or 20000 8PSK @ 2/3 FEC) per transponder, but I wouldn't expect more than that. With 16 of these transponders as of January 1, 2005, it could increase their capacity by over 85%.
Here's more for those that question what can VOOM do in the future:
In 2003, Rainbow DBS received authorization from the Federal Communications
Commission ("FCC") to construct, launch and operate four fixed service, Ka-band
communications satellites that Rainbow DBS expects to use to provide additional
services, including data and video applications. Rainbow DBS received
authorization for a fifth Ka-band satellite in January 2004. In connection with
these authorizations, Rainbow DBS was required to deposit $5,000 per
authorization in the form of a bond. At December 31, 2003, Rainbow DBS had
deposited $20,000, of which $5,000 is included in other current assets in the
accompanying combined balance sheet. In addition, in 2004, Rainbow DBS loaned
approximately $85,000 to an entity that recently acquired licenses from the FCC
to provide multichannel video distribution and data service (MVDDS) service in
46 metropolitan areas in the United States. Rainbow DBS has also agreed to a
put/call option with the other investor in this entity. The agreement gives
Rainbow DBS a call option to purchase a 41% membership interest at an exercise
price of $4,230. If Rainbow DBS does not exercise the call option within 60 days
following the grant of the licenses by the FCC, the agreement gives the other
investor the right to put the 41% membership interest to Rainbow DBS at the same
exercise price of $4,230. If either party exercises its put or call option, the
other investor will then have the right, for ten years, to put its remaining 10%
interest to Rainbow DBS at fair value.
Rainbow DBS has not identified a source of funding for the construction and
launch of the five Ka-band satellites and has not identified financing sources
for the build-out of the infrastructure to exploit the MVDDS licenses. The
continued validity of the Ka-band licenses and authorizations are subject to
certain requirements, including the requirement to construct and launch
satellites according to specific milestones and deadlines. The bond for a
particular authorization would be forfeited if Rainbow DBS fails to meet any
FCC-imposed satellite construction milestones for that authorization without an
adequate reason, such as technical problems with a satellite launch vehicle. The
Company is in the process of soliciting information from up to five leading
manufacturers of Ka-band satellites. Once this information is reviewed, the
Company will be requesting bids from some or all of them for the manufacture and
in-orbit delivery of up to five satellites. While the Company has not received
any bids, the Company anticipates that the cost of these satellites will be
significant.
In 2003, Rainbow DBS received authorization from the Federal Communications
Commission ("FCC") to construct, launch and operate four fixed service, Ka-band
communications satellites that Rainbow DBS expects to use to provide additional
services, including data and video applications. Rainbow DBS received
authorization for a fifth Ka-band satellite in January 2004. In connection with
these authorizations, Rainbow DBS was required to deposit $5,000 per
authorization in the form of a bond. At December 31, 2003, Rainbow DBS had
deposited $20,000, of which $5,000 is included in other current assets in the
accompanying combined balance sheet. In addition, in 2004, Rainbow DBS loaned
approximately $85,000 to an entity that recently acquired licenses from the FCC
to provide multichannel video distribution and data service (MVDDS) service in
46 metropolitan areas in the United States. Rainbow DBS has also agreed to a
put/call option with the other investor in this entity. The agreement gives
Rainbow DBS a call option to purchase a 41% membership interest at an exercise
price of $4,230. If Rainbow DBS does not exercise the call option within 60 days
following the grant of the licenses by the FCC, the agreement gives the other
investor the right to put the 41% membership interest to Rainbow DBS at the same
exercise price of $4,230. If either party exercises its put or call option, the
other investor will then have the right, for ten years, to put its remaining 10%
interest to Rainbow DBS at fair value.
Rainbow DBS has not identified a source of funding for the construction and
launch of the five Ka-band satellites and has not identified financing sources
for the build-out of the infrastructure to exploit the MVDDS licenses. The
continued validity of the Ka-band licenses and authorizations are subject to
certain requirements, including the requirement to construct and launch
satellites according to specific milestones and deadlines. The bond for a
particular authorization would be forfeited if Rainbow DBS fails to meet any
FCC-imposed satellite construction milestones for that authorization without an
adequate reason, such as technical problems with a satellite launch vehicle. The
Company is in the process of soliciting information from up to five leading
manufacturers of Ka-band satellites. Once this information is reviewed, the
Company will be requesting bids from some or all of them for the manufacture and
in-orbit delivery of up to five satellites. While the Company has not received
any bids, the Company anticipates that the cost of these satellites will be
significant.
Wonder what happened to those two Tps from E*:
Our Basic DBS Frequency Licenses and Authorizations. We have a
license to transmit on 11 frequencies on our Rainbow 1 satellite at the
61.5(degree) W.L. orbital location, which expires in 2013, as well as
authorizations to operate earth stations to control and communicate with the
satellite. These authorizations are renewable by the FCC. We also hold special
temporary authority ("STA") to transmit over two additional DBS frequencies at
61.5(degree) W.L. The FCC has not yet adopted rules for the permanent assignment
of these channels, and we cannot predict when or if the FCC will permanently
assign them. The STA runs for a period of 180 days and may be extended. The
initial STA expired on April 5, 2004, but we have applied for an extension and
under FCC rules may continue to transmit under the STA during the pendency of
the extension request. We will have use of the two channels until the earliest
of October 2, 2004, the permanent assignment of the two channels, or an FCC
order requiring Rainbow DBS to vacate the two channels. If the FCC has not
permanently assigned these channels by October 2, 2004, we may apply to extend
our STA for an additional 180 days. The STA is subject to several restrictive
conditions and limitations regarding our use of the frequencies.
We are authorized to operate two earth stations to transmit signals
to and receive signals from the Rainbow 1 satellite. One earth station is
located in Black Hawk, South Dakota and is used for tracking, telemetry and
command of our satellites. The other is operated in Bethpage, New York and is
used to transmit programming signals to the satellite. The licenses for these
stations will expire in 2018. DBS space station licenses have ten year terms,
shorter than the useful life of a healthy direct broadcast satellite. Earth
station licenses have 15-year terms. Generally speaking, all of our licenses are
subject to expiration unless renewed by the FCC, and our special temporary
authorizations are granted for periods of 180 days or less, subject again to
possible renewal by the FCC. Licenses may also be revoked or modified by the
FCC. If any of our licenses were not renewed or were revoked or were
significantly modified, it could have a material adverse effect on our business.
Our Basic DBS Frequency Licenses and Authorizations. We have a
license to transmit on 11 frequencies on our Rainbow 1 satellite at the
61.5(degree) W.L. orbital location, which expires in 2013, as well as
authorizations to operate earth stations to control and communicate with the
satellite. These authorizations are renewable by the FCC. We also hold special
temporary authority ("STA") to transmit over two additional DBS frequencies at
61.5(degree) W.L. The FCC has not yet adopted rules for the permanent assignment
of these channels, and we cannot predict when or if the FCC will permanently
assign them. The STA runs for a period of 180 days and may be extended. The
initial STA expired on April 5, 2004, but we have applied for an extension and
under FCC rules may continue to transmit under the STA during the pendency of
the extension request. We will have use of the two channels until the earliest
of October 2, 2004, the permanent assignment of the two channels, or an FCC
order requiring Rainbow DBS to vacate the two channels. If the FCC has not
permanently assigned these channels by October 2, 2004, we may apply to extend
our STA for an additional 180 days. The STA is subject to several restrictive
conditions and limitations regarding our use of the frequencies.
We are authorized to operate two earth stations to transmit signals
to and receive signals from the Rainbow 1 satellite. One earth station is
located in Black Hawk, South Dakota and is used for tracking, telemetry and
command of our satellites. The other is operated in Bethpage, New York and is
used to transmit programming signals to the satellite. The licenses for these
stations will expire in 2018. DBS space station licenses have ten year terms,
shorter than the useful life of a healthy direct broadcast satellite. Earth
station licenses have 15-year terms. Generally speaking, all of our licenses are
subject to expiration unless renewed by the FCC, and our special temporary
authorizations are granted for periods of 180 days or less, subject again to
possible renewal by the FCC. Licenses may also be revoked or modified by the
FCC. If any of our licenses were not renewed or were revoked or were
significantly modified, it could have a material adverse effect on our business.
Programming Content:
OUR RAINBOW PROGRAMMING BUSINESS
Our Rainbow Programming business is comprised of our networks, which
include three national 24-hour networks, a variety of on-demand programming
services, a suite of 21 high-definition channels with the unique high-definition
programming content known as VOOM(SM), and our motion picture production and
distribution businesses. Our Rainbow Programming business also includes Rainbow
Network Communications, a full-service network programming origination and
distribution company.
Our Networks
Our 24-hour Networks. We own three nationally distributed 24-hour
entertainment programming networks: American Movie Classics, The Independent
Film Channel and WE: Women's Entertainment. As of March 31, 2004, AMC, IFC and
WE had approximately 74.8 million, 32.0 million and 47.7 million viewing
subscribers, respectively.
Our networks distribute their programming via cable and other
distribution technologies, including DBS. Our networks generate their revenue
from the sale of
advertising and from subscriber fees paid by cable system operators and other
customers that receive and distribute such networks.
Certain of our networks are in frequent negotiations with
distributors to increase their subscriber base. We are often subject to requests
by distributors to make upfront payments in exchange for these additional
subscribers or to waive or accept lower subscriber fees if certain numbers of
additional subscribers are provided. We also may help fund the distributors'
efforts to market our channels or we may permit distributors to offer limited
promotional periods without payment of subscriber fees. As of December 31, 2003,
we had $99 million of deferred carriage fees, which represent payments of this
type that we have made or will make, and that will be amortized over time. As we
continue our efforts to add subscribers, our subscriber revenue will continue to
be negatively affected by these subscriber acquisition fee expenses, discounted
subscriber fees and other payments; however, we believe that the resulting
increase in subscribers allows us to attract additional advertisers and command
higher advertising rates.
American Movie Classics
AMC, which was launched in 1984, is a 24-hour, movie-based network.
The network offers a comprehensive library of popular movies and original
programming that is a diverse, movie-based mix of original series, documentaries
and specials. Over the past three years AMC has garnered many of the
entertainment industry's highest honors, including eight Emmy awards, the
President's Award from The Academy of Television Arts and Sciences, a Screen
Actors Guild Award and several CableACE and Daytime Emmy awards.
AMC Subscribers and Revenues. As of March 31, 2004, AMC was licensed
by distributors throughout the United States serving approximately 82.4 million
basic subscribers and had approximately 74.8 million viewing subscribers. AMC's
sources of revenues include affiliate and advertising revenues. On October 1,
2002, the channel began airing national advertising. In 2003, approximately 23%
of total revenues were attributable to advertising.
Film Rights and Affiliation Agreements. AMC's comprehensive film
library consists of films that are licensed from major studios such as Columbia
TriStar, Twentieth Century Fox, Paramount, Warner Brothers, Universal and
MGM/United Artists under long-term contracts, with sufficient films under
contract to meet its programming requirements through 2007. AMC generally
structures its contracts for the exclusive cable television right to carry the
films during identified windows.
AMC is available on cable television and other distribution
platforms such as DBS. It is carried on basic or expanded basic tiers for which
subscribers do not have to pay a premium to receive the network. Affiliate
revenues, which in 2003 accounted for approximately 77% of AMC's revenues, are
based on fees paid by the distributors for the right to carry the programming.
The network generally enters into three to seven-year distribution contracts
with its distributors. As of March 31, 2004, AMC had affiliation agreements with
distributors including Comcast, Time Warner, DirecTV, EchoStar, Charter, Cox,
Adelphia and Cablevision. Approximately 31% of AMC's subscribers are under
agreements that expire on or prior to December 31, 2005.
The Independent Film Channel
IFC, which was launched in 1994, is dedicated to independent films,
related features and programming. IFC, which was the first network exclusively
dedicated to independent films, presents feature-length films (domestically and
internationally produced), documentaries, shorts, animation, new works, "cult
classics" and originally produced programs which chronicle independent film
trends. IFC was launched with the support of an advisory board that included
Martin Scorsese, Robert Altman, Spike Lee, Tim Robbins, Joel and Ethan Coen,
Martha Coolidge, Jim Jarmusch, Steven Soderbergh and Jodie Foster. The IFC
Advisory Board is a council of prominent filmmakers and artists who advise IFC
on artistic content and format and provide promotional support.
IFC Subscribers and Revenues. As of March 31, 2004, IFC was licensed
by distributors throughout the United States serving approximately 71.7 million
basic subscribers and had approximately 32.0 million viewing subscribers. IFC's
principal source of revenues is affiliate revenue, which accounted for
approximately 96% of IFC revenues in 2003.
Film Rights and Affiliation Agreements. IFC's film library includes
titles from leading independent film studios like Miramax, Fox Searchlight,
MGM/United Artists and Fine Line with sufficient films under contract to meet
its programming requirements through 2005. IFC also features exclusive live
coverage of notable international film events like the Cannes Film Festival, the
Independent Spirit Awards and the Gotham Awards, as well as original
programming. The network supplements this coverage with additional real-time
information on the World Wide Web and enhanced broadband.
As of March 31, 2004, IFC had affiliation agreements with
distributors including Comcast, Time Warner, DirecTV, EchoStar, Charter, Cox,
Adelphia and
Cablevision. Approximately 64% of IFC's subscribers are under agreements that
expire on or prior to December 31, 2005.
WE: Women's Entertainment
WE, formerly Romance Classics, is an entertainment service for women
that was launched in 1997. The programming features women's interest films and
original series and specials of particular interest to women. WE airs women's
interest films under the banner of Cinematherapy and different original series,
such as Mix It Up and Diva Detectives. In 2002, WE began airing the series
Felicity and in 2003, the series Ned and Stacey and Naked Truth.
WE Subscribers and Revenues. As of March 31, 2004, WE was licensed
by distributors throughout the U.S. serving approximately 69.9 million basic
subscribers, and had approximately 47.7 million viewing subscribers. WE sources
of revenues include affiliate and advertising revenues. On October 1, 2002, the
channel began airing national advertising. In 2003, approximately 40% of total
revenues were attributable to advertising.
Film Rights and Affiliation Agreements. WE has licensed exclusive
film and television titles to supplement its slate of original programming,
providing significant product volume through 2005. Film licenses are in place
with major Hollywood studios such as Twentieth Century Fox, Universal and
MGM/United Artists as well as independents like Miramax and New Line.
As of March 31, 2004, WE had affiliation agreements with
distributors including Comcast, Time Warner, DirecTV, EchoStar, Charter, Cox,
Adelphia and Cablevision. Approximately 47% of WE's subscribers are under
agreements that expire on or prior to December 31, 2005.
Our On-Demand Services
We own several video on-demand, or VOD, and subscription video
on-demand, or SVOD, programming services, including Mag Rack, IFC On Demand,
World Picks, and Sportskool.
Mag Rack
Mag Rack, formerly known as Sterling Digital, was launched in 2001
as a service designed exclusively for on-demand television and to develop new
niche programming to be distributed and marketed using new media platforms,
including digital video channels. Mag Rack provides a wide selection of "video
magazines" on various subjects such as "Yoga Retreat," "Motorcycle Freedom" and
"Inside Weddings." The programming is delivered as on-demand video magazines in
numerous categories focused on hobbies, lifestyles and special interests. The
service offers programming not widely found on other channels with advanced
DVD-like ability to fast-forward, rewind or pause the program. The service is
currently on Cablevision's digital tier and affiliation agreements have been
executed with Insight, Charter Communications and Mediacom.
IFC On Demand
IFC launched two VOD/SVOD services in 2003, IFC Films On Demand and
Uncensored On Demand. IFC Films On Demand features content from IFC Films, which
is offered on a VOD basis, and Uncensored On Demand features content that has
been banned or censored for religious or political reasons or has been
effectively banned from public view by mainstream media. IFC Films On Demand is
carried by distributors such as Cablevision, DirecTV and EchoStar. Uncensored On
Demand is carried by Cablevision.
World Picks
World Picks, which was launched in 2003, offers SVOD services for
carriage on cable systems and other distributors throughout the United States.
Content consists of film and television programming from other countries,
presented in their original languages, targeting key ethnic groups in major U.S.
markets. Examples of content include television programs, films, concerts,
special events, documentaries and soap operas. World Picks Latino, World Picks
Hindi, World Picks Mandarin and World Picks Russian launched in 2003 and are
currently carried by Cablevision. World Picks also offers various 24-hour
channels from other countries.
Sportskool
Sportskool, which launched in January 2004, is a national VOD
service offering expert instruction, coaching and guidance in a wide range of
sports and fitness activities such as baseball, golf, football, tennis and yoga.
The service, which features original programming available only via VOD,
launched with an extensive library of programming with well-known athletes and
sports authorities delivering the instructional segments. Sportskool is
currently carried by Cablevision.
Our VOOM(SM) Channels
On October 15, 2003, we introduced "VOOM,(SM)" which focuses
primarily on the delivery of high-definition programming. VOOM(SM) includes the
following 21 high-definition channels that we own:
- Animania: an all-cartoons channel.
- Auction: featuring collectors and their collectibles.
- Epics: a Hollywood classics channel.
- Gallery: an art channel, with world-renowned artists, exhibitions
and performances.
- HD Cinema 10(TM): 10 different film channels that offer the largest
selection of high-definition movies available anywhere.
- HD News: featuring news headlines, weather and sports and feature
stories and video essays from around the world.
- Monsters: showing exclusively horror movies.
- MOOV: featuring motion-video with a continuous flow of unusual
images set to music.
- Rave: an all music channel.
- Rush: an extreme sports channel.
- Ultra: aimed at showing global trends in food, fashion and home
design, among other things.
- World Sport: featuring worldwide sporting events.
Our 21 VOOM(SM) channels are currently distributed exclusively by
our Rainbow DBS business. We acquire programming, such as film rights, for our
VOOM(SM) channels through licensing agreements. We also create original
programming.
Rights and Affiliation Agreements
Rights Agreements
Our networks have entered into numerous contracts relating to the
acquisition of programming, including rights agreements that permit our networks
to carry certain films during certain window periods. These contracts typically
require substantial payments over extended periods of time. These rights
agreements expire at varying times and may be terminated by the other party if
our networks are not in compliance with the terms of the agreement. We cannot
assure you that our networks will ultimately be successful in negotiating
renewals of their rights agreements or in negotiating adequate substitute rights
agreements in the event that their rights agreements expire or are terminated.
In addition, certain rights arrangements that our networks are party
to are not evidenced by executed agreements. For example, some of AMC's
programming contracts with major film studios have not been executed; however,
the parties are performing on the basis of unexecuted contracts and terms of
understandings. See also "Business -- Our Rainbow Programming Business -- Our
Networks -- American Movie Classics -- Film Rights and Affiliation Agreements"
-- "-- The Independent Film Channel -- Film Rights and Affiliation Agreements"
-- "-- WE: Women's Entertainment -- Film Rights and Affiliation Agreements." We
cannot assure you that we will be successful in negotiating definitive
documentation of these agreements or that the counterparties will continue to
honor their obligations. Loss of these agreements could have a material adverse
effect on us.
Certain of Our Film Rights Agreements Are Not Evidenced by Executed Agreements
and Could Be Terminated at Any Time."
Affiliation Agreements and Significant Customers
Our networks have entered into affiliation agreements with cable
television operators and other distributors. Our networks' existing affiliation
agreements expire at various dates and some are due to expire in 2004 and 2005.
The affiliation agreements between DirecTV and Echostar and each of AMC, IFC and
WE expire at the end of 2004. These affiliation agreements cover approximately
23%, 53% and 36% of
the viewing subscribers of AMC, IFC and WE, respectively. Failure to renew these
important affiliation agreements could have a material adverse effect on our
businesses. Our networks will attempt to renew these affiliation agreements, but
even if these affiliation agreements are renewed, there can be no assurance that
the renewal rates will equal or exceed the rates that are currently being
charged. See also "Business -- Our Rainbow Programming Business -- Our Networks
-- American Movie Classics -- Film Rights and Affiliation Agreements," "-- The
Independent Film Channel -- Film Rights and Affiliation Agreements" and "-- WE:
Women's Entertainment -- Film Rights and Affiliation Agreements." In 2003,
DirecTV, Time Warner and Comcast each accounted for at least 10% of our total
net revenues.
The loss of any of our significant distributors could potentially
severely impact our business and results of operations. In addition, in some
cases, if a distributor is acquired, the affiliation agreement of the acquiring
distributor will govern following the acquisition. In those circumstances, the
acquisition of a distributor that is party to one or more affiliation agreements
with our networks on terms that are more favorable to us could adversely impact
our business and results of operations.
In addition, certain parties have the right to terminate their
affiliation agreements prior to the expiration of their term under certain
circumstances. Furthermore, certain distributors that are satellite providers or
cable companies may decide not to renew their affiliation agreements for our
programming business for competitive reasons. AMC, IFC and WE's agreements with
DirecTV and EchoStar expire at the end of 2004. On November 14, 2003, AMC filed
an action against Time Warner Entertainment, L.P. in New York State Supreme
Court for declaratory relief and damages caused by Time Warner's anticipatory
repudiation of its cable television affiliation agreement with AMC. AMC filed
that action as a result of Time Warner's notice purporting to terminate the
contract based upon their allegation that AMC had changed its programming.
Our Motion Picture Production and Distribution Business
In addition to our networks, we also own motion picture production
and distribution businesses, including IFC Entertainment, IFC Films, IFC
Theatres and IFC Productions.
IFC Entertainment
IFC Entertainment is a film library that purchases films or
distribution rights in perpetuity to films. IFC Entertainment currently owns
films, or the rights to films, such as Gates of Heaven, Vernon, Florida and A
Thin Blue Line.
IFC Films
IFC Films distributes to theaters feature-length films, including
certain films produced or co-produced by IFC Productions. IFC Films released the
Oscar-nominated films Y Tu Mama Tambien and My Big Fat Greek Wedding.
IFC Theatres
IFC Theatres owns the Greenwich Village Waverly Theatre in New York
City, which is being renovated to showcase independent films and to provide a
cultural hub for the independent film-making community.
IFC Productions
IFC Productions provides financing for both established filmmakers
and low budget features. IFC Productions has produced such films as Boys Don't
Cry, Girlfight, Men with Guns, Casa de los Babys, Camp and Pieces of April.
In addition, we own Rainbow Film Holdings, which owns two film
libraries. We broadcast the films in these libraries on our Rainbow Programming
networks or license them to third parties.
Rainbow Network Communications
Rainbow Network Communications, or RNC, is a full-service network
programming origination and distribution company. Equipment at our RNC digital
broadcast operations center digitizes, compresses, encrypts and combines the
signal with other necessary data, such as conditional access information.
RNC now provides technical services to networks including AMC, IFC,
WE, fuse, Fox SportsNet, as well as other third party sports, news and
entertainment channels, such as Bravo, WNBC and WNYW (FOX 5). RNC transfers the
programming that is produced elsewhere (programs, commercials, and features
arrive via satellite, fiber optics or on professional-grade digital video tape)
into the satellite system and in turn delivers the programming to local cable
companies and other distributors.
RNC's services also include origination, transmission, video
engineering, uplinking, encryption, affiliate engineering, technology
consulting, transponder negotiation, content ordering, quality control and
editing. RNC has a 67,000 square foot, state of the art technology center, which
consolidates master control/playback and uplink
facilities at one location in Bethpage, New York. This new center is fully
digital which enables RNC to process audio and video signals in both standard
and high-definition format.
RNC originates high-definition programming for the 21
high-definition VOOM(SM) channels and certain other high-definition channels. In
August 2003, RNC entered into a two-year programming origination agreement with
NBC Cable Networks for Bravo HD+, which launched on July 31, 2003. RNC provides
network program origination and technical services for the new channel directly
from its HD-ready technology operations center in Bethpage, NY.
OUR RAINBOW PROGRAMMING BUSINESS
Our Rainbow Programming business is comprised of our networks, which
include three national 24-hour networks, a variety of on-demand programming
services, a suite of 21 high-definition channels with the unique high-definition
programming content known as VOOM(SM), and our motion picture production and
distribution businesses. Our Rainbow Programming business also includes Rainbow
Network Communications, a full-service network programming origination and
distribution company.
Our Networks
Our 24-hour Networks. We own three nationally distributed 24-hour
entertainment programming networks: American Movie Classics, The Independent
Film Channel and WE: Women's Entertainment. As of March 31, 2004, AMC, IFC and
WE had approximately 74.8 million, 32.0 million and 47.7 million viewing
subscribers, respectively.
Our networks distribute their programming via cable and other
distribution technologies, including DBS. Our networks generate their revenue
from the sale of
advertising and from subscriber fees paid by cable system operators and other
customers that receive and distribute such networks.
Certain of our networks are in frequent negotiations with
distributors to increase their subscriber base. We are often subject to requests
by distributors to make upfront payments in exchange for these additional
subscribers or to waive or accept lower subscriber fees if certain numbers of
additional subscribers are provided. We also may help fund the distributors'
efforts to market our channels or we may permit distributors to offer limited
promotional periods without payment of subscriber fees. As of December 31, 2003,
we had $99 million of deferred carriage fees, which represent payments of this
type that we have made or will make, and that will be amortized over time. As we
continue our efforts to add subscribers, our subscriber revenue will continue to
be negatively affected by these subscriber acquisition fee expenses, discounted
subscriber fees and other payments; however, we believe that the resulting
increase in subscribers allows us to attract additional advertisers and command
higher advertising rates.
American Movie Classics
AMC, which was launched in 1984, is a 24-hour, movie-based network.
The network offers a comprehensive library of popular movies and original
programming that is a diverse, movie-based mix of original series, documentaries
and specials. Over the past three years AMC has garnered many of the
entertainment industry's highest honors, including eight Emmy awards, the
President's Award from The Academy of Television Arts and Sciences, a Screen
Actors Guild Award and several CableACE and Daytime Emmy awards.
AMC Subscribers and Revenues. As of March 31, 2004, AMC was licensed
by distributors throughout the United States serving approximately 82.4 million
basic subscribers and had approximately 74.8 million viewing subscribers. AMC's
sources of revenues include affiliate and advertising revenues. On October 1,
2002, the channel began airing national advertising. In 2003, approximately 23%
of total revenues were attributable to advertising.
Film Rights and Affiliation Agreements. AMC's comprehensive film
library consists of films that are licensed from major studios such as Columbia
TriStar, Twentieth Century Fox, Paramount, Warner Brothers, Universal and
MGM/United Artists under long-term contracts, with sufficient films under
contract to meet its programming requirements through 2007. AMC generally
structures its contracts for the exclusive cable television right to carry the
films during identified windows.
AMC is available on cable television and other distribution
platforms such as DBS. It is carried on basic or expanded basic tiers for which
subscribers do not have to pay a premium to receive the network. Affiliate
revenues, which in 2003 accounted for approximately 77% of AMC's revenues, are
based on fees paid by the distributors for the right to carry the programming.
The network generally enters into three to seven-year distribution contracts
with its distributors. As of March 31, 2004, AMC had affiliation agreements with
distributors including Comcast, Time Warner, DirecTV, EchoStar, Charter, Cox,
Adelphia and Cablevision. Approximately 31% of AMC's subscribers are under
agreements that expire on or prior to December 31, 2005.
The Independent Film Channel
IFC, which was launched in 1994, is dedicated to independent films,
related features and programming. IFC, which was the first network exclusively
dedicated to independent films, presents feature-length films (domestically and
internationally produced), documentaries, shorts, animation, new works, "cult
classics" and originally produced programs which chronicle independent film
trends. IFC was launched with the support of an advisory board that included
Martin Scorsese, Robert Altman, Spike Lee, Tim Robbins, Joel and Ethan Coen,
Martha Coolidge, Jim Jarmusch, Steven Soderbergh and Jodie Foster. The IFC
Advisory Board is a council of prominent filmmakers and artists who advise IFC
on artistic content and format and provide promotional support.
IFC Subscribers and Revenues. As of March 31, 2004, IFC was licensed
by distributors throughout the United States serving approximately 71.7 million
basic subscribers and had approximately 32.0 million viewing subscribers. IFC's
principal source of revenues is affiliate revenue, which accounted for
approximately 96% of IFC revenues in 2003.
Film Rights and Affiliation Agreements. IFC's film library includes
titles from leading independent film studios like Miramax, Fox Searchlight,
MGM/United Artists and Fine Line with sufficient films under contract to meet
its programming requirements through 2005. IFC also features exclusive live
coverage of notable international film events like the Cannes Film Festival, the
Independent Spirit Awards and the Gotham Awards, as well as original
programming. The network supplements this coverage with additional real-time
information on the World Wide Web and enhanced broadband.
As of March 31, 2004, IFC had affiliation agreements with
distributors including Comcast, Time Warner, DirecTV, EchoStar, Charter, Cox,
Adelphia and
Cablevision. Approximately 64% of IFC's subscribers are under agreements that
expire on or prior to December 31, 2005.
WE: Women's Entertainment
WE, formerly Romance Classics, is an entertainment service for women
that was launched in 1997. The programming features women's interest films and
original series and specials of particular interest to women. WE airs women's
interest films under the banner of Cinematherapy and different original series,
such as Mix It Up and Diva Detectives. In 2002, WE began airing the series
Felicity and in 2003, the series Ned and Stacey and Naked Truth.
WE Subscribers and Revenues. As of March 31, 2004, WE was licensed
by distributors throughout the U.S. serving approximately 69.9 million basic
subscribers, and had approximately 47.7 million viewing subscribers. WE sources
of revenues include affiliate and advertising revenues. On October 1, 2002, the
channel began airing national advertising. In 2003, approximately 40% of total
revenues were attributable to advertising.
Film Rights and Affiliation Agreements. WE has licensed exclusive
film and television titles to supplement its slate of original programming,
providing significant product volume through 2005. Film licenses are in place
with major Hollywood studios such as Twentieth Century Fox, Universal and
MGM/United Artists as well as independents like Miramax and New Line.
As of March 31, 2004, WE had affiliation agreements with
distributors including Comcast, Time Warner, DirecTV, EchoStar, Charter, Cox,
Adelphia and Cablevision. Approximately 47% of WE's subscribers are under
agreements that expire on or prior to December 31, 2005.
Our On-Demand Services
We own several video on-demand, or VOD, and subscription video
on-demand, or SVOD, programming services, including Mag Rack, IFC On Demand,
World Picks, and Sportskool.
Mag Rack
Mag Rack, formerly known as Sterling Digital, was launched in 2001
as a service designed exclusively for on-demand television and to develop new
niche programming to be distributed and marketed using new media platforms,
including digital video channels. Mag Rack provides a wide selection of "video
magazines" on various subjects such as "Yoga Retreat," "Motorcycle Freedom" and
"Inside Weddings." The programming is delivered as on-demand video magazines in
numerous categories focused on hobbies, lifestyles and special interests. The
service offers programming not widely found on other channels with advanced
DVD-like ability to fast-forward, rewind or pause the program. The service is
currently on Cablevision's digital tier and affiliation agreements have been
executed with Insight, Charter Communications and Mediacom.
IFC On Demand
IFC launched two VOD/SVOD services in 2003, IFC Films On Demand and
Uncensored On Demand. IFC Films On Demand features content from IFC Films, which
is offered on a VOD basis, and Uncensored On Demand features content that has
been banned or censored for religious or political reasons or has been
effectively banned from public view by mainstream media. IFC Films On Demand is
carried by distributors such as Cablevision, DirecTV and EchoStar. Uncensored On
Demand is carried by Cablevision.
World Picks
World Picks, which was launched in 2003, offers SVOD services for
carriage on cable systems and other distributors throughout the United States.
Content consists of film and television programming from other countries,
presented in their original languages, targeting key ethnic groups in major U.S.
markets. Examples of content include television programs, films, concerts,
special events, documentaries and soap operas. World Picks Latino, World Picks
Hindi, World Picks Mandarin and World Picks Russian launched in 2003 and are
currently carried by Cablevision. World Picks also offers various 24-hour
channels from other countries.
Sportskool
Sportskool, which launched in January 2004, is a national VOD
service offering expert instruction, coaching and guidance in a wide range of
sports and fitness activities such as baseball, golf, football, tennis and yoga.
The service, which features original programming available only via VOD,
launched with an extensive library of programming with well-known athletes and
sports authorities delivering the instructional segments. Sportskool is
currently carried by Cablevision.
Our VOOM(SM) Channels
On October 15, 2003, we introduced "VOOM,(SM)" which focuses
primarily on the delivery of high-definition programming. VOOM(SM) includes the
following 21 high-definition channels that we own:
- Animania: an all-cartoons channel.
- Auction: featuring collectors and their collectibles.
- Epics: a Hollywood classics channel.
- Gallery: an art channel, with world-renowned artists, exhibitions
and performances.
- HD Cinema 10(TM): 10 different film channels that offer the largest
selection of high-definition movies available anywhere.
- HD News: featuring news headlines, weather and sports and feature
stories and video essays from around the world.
- Monsters: showing exclusively horror movies.
- MOOV: featuring motion-video with a continuous flow of unusual
images set to music.
- Rave: an all music channel.
- Rush: an extreme sports channel.
- Ultra: aimed at showing global trends in food, fashion and home
design, among other things.
- World Sport: featuring worldwide sporting events.
Our 21 VOOM(SM) channels are currently distributed exclusively by
our Rainbow DBS business. We acquire programming, such as film rights, for our
VOOM(SM) channels through licensing agreements. We also create original
programming.
Rights and Affiliation Agreements
Rights Agreements
Our networks have entered into numerous contracts relating to the
acquisition of programming, including rights agreements that permit our networks
to carry certain films during certain window periods. These contracts typically
require substantial payments over extended periods of time. These rights
agreements expire at varying times and may be terminated by the other party if
our networks are not in compliance with the terms of the agreement. We cannot
assure you that our networks will ultimately be successful in negotiating
renewals of their rights agreements or in negotiating adequate substitute rights
agreements in the event that their rights agreements expire or are terminated.
In addition, certain rights arrangements that our networks are party
to are not evidenced by executed agreements. For example, some of AMC's
programming contracts with major film studios have not been executed; however,
the parties are performing on the basis of unexecuted contracts and terms of
understandings. See also "Business -- Our Rainbow Programming Business -- Our
Networks -- American Movie Classics -- Film Rights and Affiliation Agreements"
-- "-- The Independent Film Channel -- Film Rights and Affiliation Agreements"
-- "-- WE: Women's Entertainment -- Film Rights and Affiliation Agreements." We
cannot assure you that we will be successful in negotiating definitive
documentation of these agreements or that the counterparties will continue to
honor their obligations. Loss of these agreements could have a material adverse
effect on us.
Certain of Our Film Rights Agreements Are Not Evidenced by Executed Agreements
and Could Be Terminated at Any Time."
Affiliation Agreements and Significant Customers
Our networks have entered into affiliation agreements with cable
television operators and other distributors. Our networks' existing affiliation
agreements expire at various dates and some are due to expire in 2004 and 2005.
The affiliation agreements between DirecTV and Echostar and each of AMC, IFC and
WE expire at the end of 2004. These affiliation agreements cover approximately
23%, 53% and 36% of
the viewing subscribers of AMC, IFC and WE, respectively. Failure to renew these
important affiliation agreements could have a material adverse effect on our
businesses. Our networks will attempt to renew these affiliation agreements, but
even if these affiliation agreements are renewed, there can be no assurance that
the renewal rates will equal or exceed the rates that are currently being
charged. See also "Business -- Our Rainbow Programming Business -- Our Networks
-- American Movie Classics -- Film Rights and Affiliation Agreements," "-- The
Independent Film Channel -- Film Rights and Affiliation Agreements" and "-- WE:
Women's Entertainment -- Film Rights and Affiliation Agreements." In 2003,
DirecTV, Time Warner and Comcast each accounted for at least 10% of our total
net revenues.
The loss of any of our significant distributors could potentially
severely impact our business and results of operations. In addition, in some
cases, if a distributor is acquired, the affiliation agreement of the acquiring
distributor will govern following the acquisition. In those circumstances, the
acquisition of a distributor that is party to one or more affiliation agreements
with our networks on terms that are more favorable to us could adversely impact
our business and results of operations.
In addition, certain parties have the right to terminate their
affiliation agreements prior to the expiration of their term under certain
circumstances. Furthermore, certain distributors that are satellite providers or
cable companies may decide not to renew their affiliation agreements for our
programming business for competitive reasons. AMC, IFC and WE's agreements with
DirecTV and EchoStar expire at the end of 2004. On November 14, 2003, AMC filed
an action against Time Warner Entertainment, L.P. in New York State Supreme
Court for declaratory relief and damages caused by Time Warner's anticipatory
repudiation of its cable television affiliation agreement with AMC. AMC filed
that action as a result of Time Warner's notice purporting to terminate the
contract based upon their allegation that AMC had changed its programming.
Our Motion Picture Production and Distribution Business
In addition to our networks, we also own motion picture production
and distribution businesses, including IFC Entertainment, IFC Films, IFC
Theatres and IFC Productions.
IFC Entertainment
IFC Entertainment is a film library that purchases films or
distribution rights in perpetuity to films. IFC Entertainment currently owns
films, or the rights to films, such as Gates of Heaven, Vernon, Florida and A
Thin Blue Line.
IFC Films
IFC Films distributes to theaters feature-length films, including
certain films produced or co-produced by IFC Productions. IFC Films released the
Oscar-nominated films Y Tu Mama Tambien and My Big Fat Greek Wedding.
IFC Theatres
IFC Theatres owns the Greenwich Village Waverly Theatre in New York
City, which is being renovated to showcase independent films and to provide a
cultural hub for the independent film-making community.
IFC Productions
IFC Productions provides financing for both established filmmakers
and low budget features. IFC Productions has produced such films as Boys Don't
Cry, Girlfight, Men with Guns, Casa de los Babys, Camp and Pieces of April.
In addition, we own Rainbow Film Holdings, which owns two film
libraries. We broadcast the films in these libraries on our Rainbow Programming
networks or license them to third parties.
Rainbow Network Communications
Rainbow Network Communications, or RNC, is a full-service network
programming origination and distribution company. Equipment at our RNC digital
broadcast operations center digitizes, compresses, encrypts and combines the
signal with other necessary data, such as conditional access information.
RNC now provides technical services to networks including AMC, IFC,
WE, fuse, Fox SportsNet, as well as other third party sports, news and
entertainment channels, such as Bravo, WNBC and WNYW (FOX 5). RNC transfers the
programming that is produced elsewhere (programs, commercials, and features
arrive via satellite, fiber optics or on professional-grade digital video tape)
into the satellite system and in turn delivers the programming to local cable
companies and other distributors.
RNC's services also include origination, transmission, video
engineering, uplinking, encryption, affiliate engineering, technology
consulting, transponder negotiation, content ordering, quality control and
editing. RNC has a 67,000 square foot, state of the art technology center, which
consolidates master control/playback and uplink
facilities at one location in Bethpage, New York. This new center is fully
digital which enables RNC to process audio and video signals in both standard
and high-definition format.
RNC originates high-definition programming for the 21
high-definition VOOM(SM) channels and certain other high-definition channels. In
August 2003, RNC entered into a two-year programming origination agreement with
NBC Cable Networks for Bravo HD+, which launched on July 31, 2003. RNC provides
network program origination and technical services for the new channel directly
from its HD-ready technology operations center in Bethpage, NY.
I think Voom should offer all the SD programming from one satellite and all the HD programming from the other satellite, that way if a consumer was only interested in SD programming then that customer would only need the smaller 18 inch dish at 61.5.
As has been said in the past, their upgrade card will do both MPEG4 and WM9. They'll use whatever delivers the best results. Availability and maturity of the appropriate encoders (on VOOM's end) will also play a role. The current expectation is that they'll use WM9 eventually, but not necessarily to start.
The problem with this approach is that it requires all customers to have the larger dish. Some will not like the larger "Superdish," and VOOM shouldn't force a customer to take a dish that they don't want (i.e. that the wife may now allow).
I think they would do better to more closely follow Dish Network's transition to the Dish500 -- let people keep the service they have now, but offer incentives for people to upgrade. For example, the customer with the standard dish might get the SD RSN (after the movie to MPEG4/WM9), while those who agree to the larger dish might receive the HD version of the RSN at no additional charge.
I think we'll see HD PPV, HD RSNs, and HDTV sports packages from the new slot. We may also see a new programming tier (between Basic and VaVaVoom) at the new slot. Beyond TNT-HD and perhaps one or maybe two other additions, all future HD programming will probably have to come from the new slot for the forseeable future, as the MPEG4/WM9 upgrade for HD channels isn't expected before late 2005.
Speculation on future packages come January 1, 2005...
Possibility #1
Possibility #2
Which would you prefer?
Possibility #1
VOOM Basic - $39.90/mo and includes VOOM "exclusives", current "cable favorites" at higher quality, plus an additional ~10 SD channels (SciFi, HGTV, FOOD, USA, Discovery Science, etc), including your regional sports network in SD. No new dish required, but your regional sports network in HD is available at no extra charge if you accept the larger dish.
VOOM Extreme - $44.90-49.90/mo and includes everything in VOOM Basic, plus ESPN-HD, Discovery HD, BravoHD, TNT-HD, and at least several additional new HD channels. More HD channels added at no extra cost as they become available. Requires larger dish to receive your RSN in HD and the new HD channels.
Sports Pack - $9.90/mo with all available RSNs in HD (blackouts when required), plus NBATV, Outdoor channel, NFL Network, and other new sports related channels in HD. Requires larger dish.
VaVaVoom - $84.90/mo and includes VOOM Extreme, Sports Pack, and all premium movie packages. Requires larger dish to receive sports pack and new additions.
Network Pack - $4.90/mo with east and west feeds of HD networks for distant signal customers, if the new SHVIA allows (it may not). Requires larger dish.
Premium Sports packages - Extra Innings, NBA League Pass, NHL Center Ice, MLS DirectKick, and ESPN GamePlan in HD. Requires larger dish.
HD PPV channels - Requires larger dish.
Notes & Future plans: The added channels and minimal increase to VaVaVoom would encourage more customers to adopt the larger dish with this package, while not significantly impacting current and future VaVaVoom customers that don't want the dish upgrade. After the transition to WM9/H.264 encoding for HD in late 2005, the new HD channels in VOOM Extreme and the VOOM Sports Pack, except the HD RSNs, could move to the smaller dish. That way, any customer with the 18" dish could subscribe to VOOM Extreme and receive all its new HD channels. Moreover, once these channels are moved to the small dish, the price of VaVaVoom could increase to $89.90/mo (January, 2006). Keeping the HD RSNs on the larger dish would leave additional capacity for new VOOM Extreme HD channels in 2006 and 2007.
Possibility #2
VOOM Basic - $44.90/mo and includes VOOM "exclusives", existing "Marquee" HD channels plus TNT-HD, existing "cable favorites" at higher quality, plus an additional ~10 SD channels (SciFi, HGTV, FOOD, USA, Discovery Science, etc), including your regional sports network in SD. No new dish required, but your regional sports network in HD is available at no extra charge if you accept the larger dish.
VOOM Extreme - $49.90/mo and includes everything in VOOM Basic, plus additional / future HD channels. More HD channels added at no extra cost as they become available. Requires larger dish.
Sports Pack - $9.90/mo with all available RSNs in HD (blackouts when required), plus NBATV, Outdoor channel, NFL Network, and other new sports related channels in HD. Requires larger dish.
VaVaVoom - $84.90/mo and includes VOOM Extreme, Sports Pack, and all premium movie packages. Requires larger dish to receive sports pack and new Plus additions.
Network Pack - $4.90/mo with east and west feeds of HD networks for distant signal customers, if the new SHVIA allows (it may not). Requires larger dish.
Premium Sports packages - Extra Innings, NBA League Pass, NHL Center Ice, MLS DirectKick, and ESPN GamePlan in HD. Requires larger dish.
HD PPV channels - Requires larger dish.
Notes & Future plans: As with possibility #1, the added channels and minimal increase to VaVaVoom would encourage more customers to adopt the larger dish with this package, while not significantly impacting those current and future VaVaVoom customers that don't want the dish upgrade. After the transition to WM9/H.264 encoding for HD in late 2005, the new HD channels in VOOM Extreme and the VOOM Sports Pack, except the HD RSNs, could move to the smaller dish. That way, any customer with the 18" dish could subscribe to VOOM Extreme and receive its new HD channels. Moreover, once these channels are moved to the small dish, the price of VaVaVoom could increase to $89.90/mo (January, 2006). Keeping the HD RSNs on the larger dish would leave additional capacity for new VOOM Extreme channels in 2006 and 2007.
Which would you prefer?
Would it be possible to use a 2 dish setup similar to Dish and BEV, with the two dishes linked with a SW21 switch or equivilant?
A second smaller dish would have better WAF than the very large one. My wife was NOT very happy when I told her about this, and, yet, she does not mind me now having 6 smaller dishes on our roof.
Shelly
A second smaller dish would have better WAF than the very large one. My wife was NOT very happy when I told her about this, and, yet, she does not mind me now having 6 smaller dishes on our roof.
Shelly
Two smaller dishes is not an option. FSS spectrum is licensed every two degrees, and thus the larger dish necessary to differentiate 72 degrees from 70. There is no DBS spectrum (i.e. for a second dish) available for lease, and VOOM does not have another satellite to launch to a different DBS slot.
calm down everybody. geeeez. people are already creating packages. whew. my goodness. just wait and see what happens. stop wasting time creating voom packages.
babyj said:
Also - keep in mind that one of the reasons for a second satellite is as a contingency. In case Rainbow1 fails, they would want the flexibility to move to the other satellite with minimal impact or delay. If they use transponder space on two satellites, and they don't utilize the transponders completely, then in case one satellite fails, the other can pick up the load by fully utilizing available transponder space (additional transponders and packing more channels per transponder). For the contingency plan to work, all customers must have the wide dish.
In the case of a satellite failure, we would suddenly lose half of the channels. Then - within hours - the channels would come back. We may see some initial PQ issues, but those would improve. We would not know that they just lost a satellite and switched to the alternate - unless they told us.
Ken F said:
Wow. This is really speculation at its best
It almost seem that you got hold of a VOOM internal secret memo of some sort.
Let's all hope it all come true.
If it were true I want to purchase my recievers and sign up for the most expensive package.Walter L. said:Wow. This is really speculation at its best
It almost seem that you got hold of a VOOM internal secret memo of some sort.
Let's all hope it all come true.
i'm an institutional investor currently researching rainbow media. gator's question regarding the viability of voom is the largest issue in the CVC/rainbow story. on page 103 of the form 10 you'll find detail on the company's liquidity situation.
currently rainbow is projecting that it will need $482m to fund voom in 2004. CVC is contributing $237m to rainbow while the remainder will have to be funded through debt. rainbow currently has access to $250m in debt financing from a bank so the company should be operational for at least a year.
what i'm now trying to figure out is if VOOM is able to gather enough subs to justify continuing operating before DirecTV's and EchoStar's HD content catches up. as early adopters of voom technology your opinions on this subject would be extremely helpful and appreciated. thanks in advance for your help.
- big buck
i'm curious
currently rainbow is projecting that it will need $482m to fund voom in 2004. CVC is contributing $237m to rainbow while the remainder will have to be funded through debt. rainbow currently has access to $250m in debt financing from a bank so the company should be operational for at least a year.
what i'm now trying to figure out is if VOOM is able to gather enough subs to justify continuing operating before DirecTV's and EchoStar's HD content catches up. as early adopters of voom technology your opinions on this subject would be extremely helpful and appreciated. thanks in advance for your help.
- big buck
i'm curious
