Rainbow Media May Have Financing Problems (VOOM)

[rtt2]

Rainbow Media May Have Financing Problems
06.24.04, 10:04 AM ET

Morgan Stanley lowered the price target on "equal-weight"-rated
Cablevision Systems (nyse: CVC - news - people ) to $21 from $26,
citing a lower valuation on Rainbow DBS, the company's satellite
division which will be spun off along with other assets as Rainbow
Media Enterprises. Morgan Stanley said that the previous price
target consisted of $21 for Cablevision assets after the spin-off
and $5 for Rainbow Media. Citing continued losses at Rainbow DBS and
Cablevision's new bundling strategy for cable, the research firm cut
the target to $19 for Cablevision assets and $2 for Rainbow Media.
Morgan Stanley said that there is a risk that Rainbow Media can't
obtain financing and that Cablevision may need to provide more
funding; Rainbow Media must raise $1.2 billion to $1.4 billion in
financing for the spin-off to happen. There is also a risk that
Rainbow Media runs out of funding by 2006, Morgan Stanley said.
Assuming spin-off occurs, Cablevision's remaining assets are cable,
Lightpath (the business telecommunications services division of
Cablevision) and Madison Square Garden entertainment businesses and
local sports teams. However, Moran Stanley said that while trends at
the telecommunications business "have been very positive,"
the "triple play bundle is of some concern given the magnitude of
the discount." The firm lowered its average revenue per unit
assumptions to reflect the new offering, which cut the target value
associated with the CVC assets after the spin-off to $19 from $21.

 

[gutter]

This really is an old story and does not take into account the growth of HDTV each year in triple digits. I agree the VOOM must be ahead of the competition to remain viable and must create brand loyalty. That's where us Voomer's come in.

 

[rtt2]

How can it be old it was written yesterday?
Analysts keep close and are well aware of the issues you talk about.

I understand there is growth but the question being raised is whether VOOM can capitalize on the growth.

 

[vurbano]

How can it be old it was written yesterday?
Analysts keep close and are well aware of the issues you talk about.

I understand there is growth but the question being raised is whether VOOM can capitalize on the growth.

It is very old. This is what has been said since Voom filed papers for the spin off months ago. The only current thing in the article is probably the lowering of the stock price.

 

[gutter]

Besides Morgan Stanley has had their own issues with the SEC and preferred trading. I don't own stock in Voom or Cablevision. But I like their style for reaching for new heights. They seem to have visionaries willing to take a chance. That's why I will stick with Voom. so so PQ and all.

 

[The Stone Man]

This is related, and I found it to be interesting. Maybe some of you will too. It's an article from yesterday's Rocky Mountain News, talking about the competition from DirecTV and from cable--that seem to be limiting the stock price for E*. Nowhere does it mention Voom as a competitor, and some of the numbers in here are hard to digest.
Echostar--has over 10 million customers
DirecTV---signed up 460,000 new subs in the 1st quarter
Overall----over 90 million homes have satellite or cable service.

Full article here: http://www.rockymountainnews.com/drmn/business/article/0,1299,DRMN_4_2992325,00.html

 

[vinnyv07]

Rainbow Media May Have Financing Problems
06.24.04, 10:04 AM ET

There is also a risk that
Rainbow Media runs out of funding by 2006, Morgan Stanley said. QUOTE]
I really think that this statement is something that is written for the now and projecting what could happen. Sure Im sure everyone here knows that VOOM has to grow in order to survive. By 2006...Voom better have a impressive sub base or show that they have grown from where they are today. Of course if they dont its curtains for VOOM. You cant expect investors to keep plugging money into a losing propostion. Voom will grow...and so will its sub base.

 

[vurbano]

Frankly, I dont care. If voom fails that space will most likely be used by E* or D* for HD programming and ill go back to one of those. Rainbow One is up there and it will be used by someone. I am a total HD "john" and will go with the biggest HD "ho" I can get.

 

[Sean Mota]

The problem will be how motivated will someone who buys the satellite will be to put $$$ into an HDTV service. Many seem to think that if VOOM fails it will be a proud battle for E* and D*. Yes, it will be for E* and D*. I am not sure it will be for HDTV customers. Why is it that E* or D* today don't have more HD channels on their system and we all have to go and start with another satellite service to quench our thirst for HD programming? Do you really think that E* or D* are motivated to bring HD to the masses?

 

[vinnyv07]

I could definetly see someone else owning VOOM or using the Rainbow One in the future. I like VOOM though and hope it lasts this year and beyond. Theres alot bad about the programming on VOOM but there has been some good. Im comparing the 52 bucks a mth that I pay for VOOM to the 55 I paid for alot less with TWC. Voom has been great...but I also sub to Directv.

 

[bryan27]

Frankly, I dont care. If voom fails that space will most likely be used by E* or D* for HD programming and ill go back to one of those.

And unlike Primestar and Alpastar boxes the Voom boxes can be used as an OTA STB instead of a door block. Prior to death all they have to do is send a new program to remove all the satellite functions.

I predict at year end VOOM will have 250,000 to 500,000 subscribers. By end of 2005 they will have 750,000 to 1 Million.

 

[vurbano]

The problem will be how motivated will someone who buys the satellite will be to put $$$ into an HDTV service. Many seem to think that if VOOM fails it will be a proud battle for E* and D*. Yes, it will be for E* and D*. I am not sure it will be for HDTV customers. Why is it that E* or D* today don't have more HD channels on their system and we all have to go and start with another satellite service to quench our thirst for HD programming? Do you really think that E* or D* are motivated to bring HD to the masses?

I think the percentage of HD TV sales, the emergence of Voom and dont forget the NFL with FOX broadcasting a large amount in HD has given D* a wakeup call. They will need a tremendous bandwidth increase just to handle sunday ticket in HD. They have finally announced plans for more HD. Last year their just werent that many HD stations to be had. Isnt HD LIL one of the most bold statements youve ever heard? 30 markets in the next 3 years? Along with national HD feeds.If you have that kind of bandwidth then you certainly have the bandwidth to add a handfull of new channels like tnthd every year. Now HD stations they are popping up every month, or announcements are popping up every month. The following are very new or just announced intentions to go HD:

BravoHD
encoreHD
TNThd
wealthHD
TBSHD (soon, mark my words)
AMCHD
FOXHD

the list will grow and I think D* has realized this. I have no clue if E* has. Maybe E* would be the really interested party if V* fails. As for me im riding this horse until I see it losing.

 

[Sean Mota]

Are you saying that these will be in D*? Where's the announcement?

 

[vurbano]

And unlike Primestar and Alpastar boxes the Voom boxes can be used as an OTA STB instead of a door block. Prior to death all they have to do is send a new program to remove all the satellite functions.

I predict at year end VOOM will have 250,000 to 500,000 subscribers. By end of 2005 they will have 750,000 to 1 Million.

Unfortunately, I think Voom will have to offer distant HD network feeds inorder to survive, and id like to see that space come from the exclusive channels. They need to stop the churn rate in rural areas and open up the entire country to their service. They must succeed as a primary supplier, they are too expensive for an add on service.

 

[vurbano]

Are you saying that these will be in D*? Where's the announcement?

No only foxhd, and sunday ticket foxhd games, distant network HD, and the 30 HD LIL's in 3omarkets in 3 yrs has been announced as I recall. The others are speculation. The point is, if you have bandwidth for HD LIL in 30 markets over 3 yrs, you certainly have bandwidth to add this small amount of HD channels. They have announced 2 satellite launches in 2005. Thats a big commitment. and I think a launch in 2006. The end of 2005 is going to be an important time for deciding Vooms fate. Thats why I keep saying add every HD channel available. If you cant, then ax the exclusives, your survival may depend on it.

I gave that list of stations only to illustrate that stations are popping up live frequently or are announcing plans. It seems like almost monthly there is news of a stations plans to go HD.

Lets not play the announcement game ok? if we did that we could say that voom has no plans to add anymore channels because they do not make announcements. And ive argued that positively in Vooms behalf over on AVS and am sick of the childish arguements about annoucing plans. The tpyical Voom users post announcing a new channel which we find by manual scan is countered by "wheres the announcement? If theres no announcement then it isnt going to happen". Even when we are watching it, it doesnt exist until its announced. LMAO

 

[bryan27]

If AMC goes HD you can guarentee we will get it first since VOOM (Rainbow) owns AMC and VOOM will probably make the HD feed unattractive to other providers with an outragous price. Same if IFC-HD started.

If anyone remembers before VOOM the service was to be called "Select Sat/HD Sat" and the basic service was to include "AMC-Widescreen." It also had Monsters-HD and "Full Frontal Fashion"

Unfortunately, I think Voom will have to offer distant HD network feeds inorder to survive, and id like to see that space come from the exclusive channels. They need to stop the churn rate in rural areas and open up the entire country to their service. They must succeed as a primary supplier, they are too expensive for an add on service.

I do agree upto a point. I don't want to see space taken from the exclusive channels as these are just about all I watch. I would rather see distants on the new slot.

What would be really great for rural areas is if the STB could analize at activation what OTA stations are being received and any missing nets automatically included. Doing it at activation would prevent anyone from disconnecting or changing the antenna to something smaller inorder to say "I don't get X Network." In the case of stations raising power to where one would then pick it up the STB would call out every couple months with an OTA signal report and the distant would be removed if you can now receive the net OTA, but if there is no signal on ones you received previously then a VOOM would call the customer and schedule a service call since it would be obivous the customer messed with the antenna, or something is actually wrong.

I agree VOOM is too expensive as an add-on service.

 

[The Stone Man]

vurbano--right there with you. If the Sept/Oct promises fall through like the "end of May software upgrade", it could be time to re-evaluate.

 

[Sean Mota]

MDVSS = LIL HD on Voom. 50% is own by VOOM the rest is own by E*. They could partnered with E* and delivered 100% of LIL HD without sending more satellite up. The actual cost of MDVSS may be cheaper than sending another satellite up and can be done a lot faster as well.

 

[Bruce]

MDVSS = LIL HD on Voom. 50% is own by VOOM the rest is own by E*. They could partnered with E* and delivered 100% of LIL HD without sending more satellite up. The actual cost of MDVSS may be cheaper than sending another satellite up and can be done a lot faster as well.

This was just posted at AVSForums that DTVNorwich only has 46 of the 212 licenses which is a little under 25% and they are all in Top markets like New York so it cost them a lot more.
From the FCC site:
1/14/2004 - 1/27/2004
Rounds: 49
Bidding Days: 9
Qualified Bidders: 14
Winning Bidders: 10 bidders won 192 licenses
Net Bids: $118,721,835

10 different companies won licenses including DTV Norwich(Dolan),South.com(Dish),MDS Operations, Inc.,Paul O'Dell,BRUCE E. FOX,
MVD Number 53 Partners,WCS Communications, Inc. and others.

Don't make a big deal about the MVDSS spectrum yet,companies that have won (paid for) the licenses have up to 3 years to use them and there is a lot of planing and building of the infrastructure and what they wish to do with them,how do we get the signals,just because they use the same spectrum as D* and E* does not mean we get them through our dishes,how do they send the signals,there was talk of hooking to Cell Towers,etc.Charlie(Dish) was talking about broadband with it but only they know.

 

[Sean Mota]

Yes, I posted the following:


Yes, I was wrong about the entire country. I went back and took a look at Press Release and it looks like they (V* and E*) got most licenses of Major Cities. Cities like New York, LA, Boston, Cleveland... That's what they got. It also stated that it took VOOM to put $250 million to put Rainbow 1 in the sky. It takes $3 million to build one of these microwave towers.

Anyway, if you think this is not a big deal that's fine but it only takes $3 million for the infrastructure and from what I read a tower can be up in less than six months.