Shane Martin
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EchoStar Is Near Deal to Buy Voom From Cablevision
By PETER GRANT and ANDY PASZTOR Staff Reporters of THE WALL STREET JOURNAL
January 20, 2005 7:48 p.m.
Cablevision Systems Corp. is close to announcing a deal to sell the assets of its money-losing Voom satellite service to EchoStar Communications Corp., which will shut down the service, according to people familiar with the matter.
The deal amounts to a major defeat for Cablevision Chairman Charles Dolan, who has championed the service for more than 10 years. Mr. Dolan had indicated to Voom employees earlier this week that his family, which owns a controlling stake in Cablevision, might itself buy the service to keep it operating.
The price of the deal wasn't immediately available. Analysts have estimated that Voom's single satellite, slots for the satellites to orbit and other equipment could fetch more than $250 million.
The deal marks the climax of a family and financial drama that pitted Mr. Dolan against his son, James Dolan, Cablevision's chief executive, who sided with board members in opposing continued support of Voom. Cablevision's board earlier this week voted over Mr. Dolan's objections to shut down or sell the service.
EchoStar, the country's second-largest satellite operator, has long been seen as the most logical buyer of Voom's assets. Voom's satellite and orbital slots would complement EchoStar's capacity and bandwidth plans. EchoStar Chairman Charles Ergen has been looking for additional satellites to add customers and provide more programming. "Charlie Ergen would be overlooking a huge opportunity" if he failed to take a serious look at Voom, said Jimmy Schaeffler, who runs a satellite-consulting firm near Carmel, Calif.
EchoStar and Cablevision declined to comment. Cablevision is the nation's sixth-largest cable network.
Voom began service in late 2003 but got off to a bad start, burning through $75.3 million in the third quarter of 2004. The service had only 26,000 subscribers at the end of that quarter. Crutchfield Corp., a large retailer of television and audio equipment, recently stopped selling Voom.
Voom's plan was to offer more high-definition channels than other operators. This failed to attract demand, especially as competitors added more high-definition offerings. Voom also lacked many of the channels carried by other operators.
Cablevision shares continued to rally yesterday on investor confidence that the company will soon stop funding Voom's deficits. In 4 p.m. composite trading on the New York Stock Exchange, shares were up $1.10, or 4.5%, at $25.48.cqCablevision, the nation's sixth-largest cable network, also owns Madison Square Garden, the New York Knicks basketball team and the New York Rangers hockey team.The decision to sell Voom marks the first time that James Dolan has publicly stood up to his father, who has continued to have an important role in running the company.
By PETER GRANT and ANDY PASZTOR Staff Reporters of THE WALL STREET JOURNAL
January 20, 2005 7:48 p.m.
Cablevision Systems Corp. is close to announcing a deal to sell the assets of its money-losing Voom satellite service to EchoStar Communications Corp., which will shut down the service, according to people familiar with the matter.
The deal amounts to a major defeat for Cablevision Chairman Charles Dolan, who has championed the service for more than 10 years. Mr. Dolan had indicated to Voom employees earlier this week that his family, which owns a controlling stake in Cablevision, might itself buy the service to keep it operating.
The price of the deal wasn't immediately available. Analysts have estimated that Voom's single satellite, slots for the satellites to orbit and other equipment could fetch more than $250 million.
The deal marks the climax of a family and financial drama that pitted Mr. Dolan against his son, James Dolan, Cablevision's chief executive, who sided with board members in opposing continued support of Voom. Cablevision's board earlier this week voted over Mr. Dolan's objections to shut down or sell the service.
EchoStar, the country's second-largest satellite operator, has long been seen as the most logical buyer of Voom's assets. Voom's satellite and orbital slots would complement EchoStar's capacity and bandwidth plans. EchoStar Chairman Charles Ergen has been looking for additional satellites to add customers and provide more programming. "Charlie Ergen would be overlooking a huge opportunity" if he failed to take a serious look at Voom, said Jimmy Schaeffler, who runs a satellite-consulting firm near Carmel, Calif.
EchoStar and Cablevision declined to comment. Cablevision is the nation's sixth-largest cable network.
Voom began service in late 2003 but got off to a bad start, burning through $75.3 million in the third quarter of 2004. The service had only 26,000 subscribers at the end of that quarter. Crutchfield Corp., a large retailer of television and audio equipment, recently stopped selling Voom.
Voom's plan was to offer more high-definition channels than other operators. This failed to attract demand, especially as competitors added more high-definition offerings. Voom also lacked many of the channels carried by other operators.
Cablevision shares continued to rally yesterday on investor confidence that the company will soon stop funding Voom's deficits. In 4 p.m. composite trading on the New York Stock Exchange, shares were up $1.10, or 4.5%, at $25.48.cqCablevision, the nation's sixth-largest cable network, also owns Madison Square Garden, the New York Knicks basketball team and the New York Rangers hockey team.The decision to sell Voom marks the first time that James Dolan has publicly stood up to his father, who has continued to have an important role in running the company.
