Here is the Wall Street Journal story:
Cablevision's Voom Reveals Slowing Subscriber Sign-Ups
By ELLEN SHENG September 10, 2004 3:06 p.m.
Of DOW JONES NEWSWIRES
NEW YORK -- Voom, Cablevision Systems Corp.'s (CVC) new satellite business, had a hard time signing up customers during the months of July and August, the company revealed in a recent Securities and Exchange Commission filing.
Customer additions slowed dramatically during the summer months, with just 3,700 new subscribers joining. As of the end of August, Cablevision had 28,700 Voom subscribers. By comparison, Voom added 17,000 customers during the second quarter, which ended in June.
In its filing, Cablevision revealed continued installation and equipment problems, particularly with its antennas. The company also said that a decision to raise prices in August may have hurt subscribership.
"Unless we are able to reverse this trend and grow our customer base quickly and significantly, we are unlikely to have a successful (satellite) business," Cablevision warned in its filing.
Voom has been an unpopular proposition on Wall Street since its launch in October. As the latecomer to the satellite TV market, Voom has tried to make a niche by becoming an all high-definition TV provider. The service currently offers over 35 HD channels, including 21 original.
But other satellite operators, DirecTV Group Inc. (DTV), which is controlled by News Corp. (NWS) and EchoStar Communications Corp. (DISH), are adding HD channels and already have about 23.2 million customers combined.
Cablevision's decision to spin off Voom was partly motivated by the desire to mollify investors who wanted to rid their exposure to the relatively speculative business.
The nascent satellite business is scheduled to be spun off later this month along with several of Cablevison's valuable national programming assets: AMC, The Independent Film Channel, Women's Entertainment and Consolidated Regional Sports. As part of the transaction, Cablevision shareholders will receive one share of the newly independent company, to be called Rainbow Media, on top of each of their Cablevision shares.
Holding on to those Rainbow shares could turn out to be a good, though speculative, investment opportunity, particularly if Voom fails soon, Craig Moffett, an analyst at independent research firm Sanford C. Bernstein, said in a note Friday.
Moffett, who doesn't own Cablevision shares, raised his rating on the Bethpage, N.Y., cable operator to outperform from market perform Friday, citing that increased possibility of Voom's demise. Moffett estimates that Voom will run of out cash by mid-2006 and probably won't have enough subscribers to be self-sustaining by then.
Voom's failure could be good news for Cablevision, he said. It "will minimize cash drains and lead to a relatively timely closure of the business," he wrote.
Voom has already dragged on Cablevision's stock price considerably. Without assigning any value to Voom, Cablevision's other businesses are worth close to $24 a share, Moffett estimates. Cablevision's core cable business is worth about $19 a share while its networks are worth at least $1.4 billion, or about $5 to $6 a Cablevision share.
With Cablevison's share price so weighed down, the $24 price point represents a 31% premium over its current trading price.
Another upside to Cablevision's stock could be a Voom buyout by No. 2 satellite broadcaster EchoStar.
DirecTV recently unveiled plans to put four more satellites into orbit, increasing its total to 10. The announcement could be good news for Cablevision, as it puts the pressure on EchoStar to find a solution to its own local-HD capacity problem, he said.
Cablevision shares recently traded at $19.37, up 5.9%, or $1.07.
Cablevision's Voom Reveals Slowing Subscriber Sign-Ups
By ELLEN SHENG September 10, 2004 3:06 p.m.
Of DOW JONES NEWSWIRES
NEW YORK -- Voom, Cablevision Systems Corp.'s (CVC) new satellite business, had a hard time signing up customers during the months of July and August, the company revealed in a recent Securities and Exchange Commission filing.
Customer additions slowed dramatically during the summer months, with just 3,700 new subscribers joining. As of the end of August, Cablevision had 28,700 Voom subscribers. By comparison, Voom added 17,000 customers during the second quarter, which ended in June.
In its filing, Cablevision revealed continued installation and equipment problems, particularly with its antennas. The company also said that a decision to raise prices in August may have hurt subscribership.
"Unless we are able to reverse this trend and grow our customer base quickly and significantly, we are unlikely to have a successful (satellite) business," Cablevision warned in its filing.
Voom has been an unpopular proposition on Wall Street since its launch in October. As the latecomer to the satellite TV market, Voom has tried to make a niche by becoming an all high-definition TV provider. The service currently offers over 35 HD channels, including 21 original.
But other satellite operators, DirecTV Group Inc. (DTV), which is controlled by News Corp. (NWS) and EchoStar Communications Corp. (DISH), are adding HD channels and already have about 23.2 million customers combined.
Cablevision's decision to spin off Voom was partly motivated by the desire to mollify investors who wanted to rid their exposure to the relatively speculative business.
The nascent satellite business is scheduled to be spun off later this month along with several of Cablevison's valuable national programming assets: AMC, The Independent Film Channel, Women's Entertainment and Consolidated Regional Sports. As part of the transaction, Cablevision shareholders will receive one share of the newly independent company, to be called Rainbow Media, on top of each of their Cablevision shares.
Holding on to those Rainbow shares could turn out to be a good, though speculative, investment opportunity, particularly if Voom fails soon, Craig Moffett, an analyst at independent research firm Sanford C. Bernstein, said in a note Friday.
Moffett, who doesn't own Cablevision shares, raised his rating on the Bethpage, N.Y., cable operator to outperform from market perform Friday, citing that increased possibility of Voom's demise. Moffett estimates that Voom will run of out cash by mid-2006 and probably won't have enough subscribers to be self-sustaining by then.
Voom's failure could be good news for Cablevision, he said. It "will minimize cash drains and lead to a relatively timely closure of the business," he wrote.
Voom has already dragged on Cablevision's stock price considerably. Without assigning any value to Voom, Cablevision's other businesses are worth close to $24 a share, Moffett estimates. Cablevision's core cable business is worth about $19 a share while its networks are worth at least $1.4 billion, or about $5 to $6 a Cablevision share.
With Cablevison's share price so weighed down, the $24 price point represents a 31% premium over its current trading price.
Another upside to Cablevision's stock could be a Voom buyout by No. 2 satellite broadcaster EchoStar.
DirecTV recently unveiled plans to put four more satellites into orbit, increasing its total to 10. The announcement could be good news for Cablevision, as it puts the pressure on EchoStar to find a solution to its own local-HD capacity problem, he said.
Cablevision shares recently traded at $19.37, up 5.9%, or $1.07.
