Cablevision’s Voom DBS Service Struggling to Gain Foothold

Voom discontinued a “no money down” equipment rental option Aug. 1. As a result of various promotions, Voom has a “large number” of customers that have never made a payment or “who are otherwise not current in their payments to us,” Cablevision said. As the “no money down” promotion ended, churn hit 11% and 9% in Aug. and Sept., respectively, Voom said. Those figures include only subscribers who disconnected from the service, Voom said; Voom didn’t start cutting off service for nonpayment until Oct. If customers with accounts that were 90 days or more past due had been dropped in Aug. and Sept., churn would have been 16% and 13%, Voom said. Subscribers declined to 26,000 as of Sept. 30, from 28,700 a month earlier, the company said. Overall, about 32% of customers that have signed on since Voom launched in Oct. 2003 have disconnected from the service.

Cablevision made the disclosures as it prepared to spin off Rainbow Media as early as this month. Rainbow Media also includes the AMC, IFC and WE: Women’s Entertainment channels. Cablevision disclosed that rather than retain $350 million in preferred securities from AMC and WE: Women’s Entertainment when the channels are spun off, as it had planned, it will shift the interest into the new company because of “expected increases in the financing requirements.” That move will boost the new company’s $1 billion in borrowing capacity and may smooth approval of the spinoff by cutting off links to Cablevision, analysts said. On Tues., Rainbow DBS said its 3rd-quarter operating loss grew to $75.2 million from $29.4 million as revenue increased to $5.9 million from $2.7 million in the 2nd quarter.

Rainbow leased 13 transponders aboard the Americom-6 bird at 72 degrees W. effective Oct. 1, but won’t use them until late first quarter 2005, it said. It will lease another 3 transponders on the same satellite on Jan. 1. The SES Americom satellite is in addition to the 11 transponders that Voom already has aboard its Rainbow-1 satellite at 61.5 degrees W. The Rainbow-1 satellite lost one of its 24 solar arrays, which use solar energy recharge the bird’s batteries, on Sept. 25, according to the SEC filing. The satellite was designed with more solar arrays than were needed to allow for sufficient power for the transponders.

Rainbow also is authorized to build, launch and operate 5 other Ka-band satellites and is required to have definite construction contracts in place by Nov. 21, the SEC filing states. The 5 satellites are expected to have a combined cost of $1-$1.5 billion, Rainbow said. Rainbow also was the winning bidder in July for 2 Ku-band frequencies over the Pacific Ocean that would enable Voom to provide service in Hawaii and parts of Alaska. It filed applications for these frequencies with the FCC in Sept. The satellites will cost $400-$500 million total, Rainbow said. Rainbow also has invested $85 million in DTV Norwich, which holds FCC licenses to provide multichannel video distribution and data service (MVDDS) in 46 U.S. markets -- including N.Y.C., where it will likely run into cross-ownership restrictions.

Overall, Cablevision said its 3rd-quarter net loss narrowed to $63.1 million, from $106.9 million a year ago, as revenue rose to $1.1 billion from $975.7 million. Cablevision’s iO: Interactive Digital cable service, added 171,382 subscribers to end the quarter with 1.3 million. Cablevision plans to introduce PVR-equipped cable set-top boxes next week and expects to shift to all-digital service within 3 years, company officials said. Cablevision also added 79,982 subscribers to its cable modem service, ending the quarter with 1.2 million. The high-speed Internet access service benefited from the launch of Cablevision’s Triple Play, which packages voice and data services with video. The 79,982 new subscribers was up from 50,000 added in the 2nd quarter, largely because of the introduction of Triple Play, company officials said. The package carried $110 revenue per subscriber.