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Cablevision finds Voom getting poor reception
Copyright 2004
Newsday (New York)
September 10, 2004 Friday
ALL EDITIONS
By Harry Berkowitz, Staff Writer
From Lexis Nexis
Voom is slowing down.
The sign-up of new subscribers slowed in July and August at the already struggling nationwide satellite TV service that Cablevision Systems Corp. launched less than one year ago, the company revealed in a new regulatory filing.
"Unless we are able to reverse this trend and grow our customer base quickly and significantly, we are unlikely to have a successful" direct broadcast satellite business, Cablevision said in the filing with the Securities & Exchange Commission.
As of Aug. 31, Jericho-based Voom had 28,700 customers, with another 1,200 awaiting installation, up from 25,000 active customers June 30. Since launching the service in October, Voom has lost three of every 10 customers who signed up.
Voom competes with DirecTV and EchoStar Communications, which have a total of more than 23-million subscribers, and with cable companies, which have about 70 million.
Adding to the challenges for Voom, which stresses high-definition TV channels, DirecTV said Wednesday it will launch four new satellites by 2007 to expand programming capacity, especially for HDTV.
Voom's sign-up rate turned upward in April, May and June but then began to slide after Voom raised prices and scaled back direct marketing efforts "when it became apparent that we could not efficiently install a growing number of customers," the filing states.
Voom depends on outside installers, who have had to learn to install new types of equipment that sometimes has "operational issues."
"To be successful, we will need to have the capability to quickly install numbers of customers significantly in excess of the number of installations that created problems for us in June and July," the filing states.
Part of the problem lies in the digital antennas Voom provides to pick up local TV stations. Based on surveys of customers who cancel the service, "poor reception of local signals is a significant cause of our higher-than-anticipated churn rate," Voom said in the filing.
Voom, which until March 31 offered free service and until Aug. 1 offered free equipment and installation, is also having a big problem with freeloaders.
"We have a large number of installed customers who have never made any payments to us or who are otherwise not current in their payments to us," the filing states. "We have begun actively seeking to bring these accounts current or to terminate service."
To cut back reliance on direct marketing, Voom also is seeking to expand its network of retail outlets, which consists mainly of 1,600 Sears stores that have provided less than 5 percent of subscribers.
For 2004, Voom posted losses of $36 million in the first quarter and $61.6 million in the second quarter.
The regulatory filing is part of the company's preparation for the spinoff of Voom, along with three cable TV channels Cablevision owns, as a separate company with its own publicly traded stock. That spinoff is scheduled for this month, although it first must get SEC approval.
