Voom Says it Has Funding to Buy Remaining Assets
Voom HD LLC, a firm formed by Cablevision Chmn. Charles Dolan and his son Thomas, has the funding to buy the satellite service’s remaining assets from the MSO, sources said. In an internal memo sent to Voom employees after Cablevision announced Mon. that it would pull the plug on the HD service within 30 days, Charles Dolan claimed he had the financing needed to buy Voom and “it was just question” of getting approval from the Cablevision board, a source said.
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“The message was that the financing is in place not to give up and to keep going,” a Voom employee said. “I know what [Cablevision CEO] James Dolan said, but his father said something different. We're hoping Charles Dolan can take it to the next level and we've got our fingers crossed that he will take over.” A Cablevision spokeswoman declined to comment and Voom officials weren’t available to comment on the memo. Despite the uncertainty in recent weeks about Voom’s future, the number of subscribers has increased to 46,000 from 26,000 at the end of the 3rd quarter on Sept. 30, Voom HD said in a news release. Cablevision didn’t disclose the number of Voom subscribers in releasing 4th-quarter earnings last week.
Under a letter of intent signed in Feb., Voom HD LLC agreed to buy the remaining assets of the service, including the 21 HD channels, subscribers and liabilities. Voom’s operating loss totaled $660 million in 2004, and Cablevision last week said it was slashing the estimated value of the HD service $355 million. It said there might be “impairment charges,” especially if a deal wasn’t closed with Charles Dolan.
Cablevision reached agreement to sell EchoStar 13 transponders aboard the 2-year-old Rainbow-1 satellite at 61.5 degrees W. But Voom HD would acquire leases for at least 6 transponders on SES’s satellite Americom-6 at 72.5 degrees W as well as Ka-band licenses to launch and operate birds at 62 degrees, 71 degrees, 77 degrees, 119 degrees and 129 degrees W. Rainbow signed a contract with Lockheed Martin in Dec. to build 5 satellites at a cost of $740 million. Voom also was the winning bidder in July for 2 Ku-band frequencies over the Pacific Ocean that would let it provide service to Hawaii and parts of Alaska. And Rainbow DBS, which oversaw Voom, also invested $85 million in DTV Norwich, which holds FCC licenses to provide multichannel video distribution and data services (MVDDS) in 46 U.S. markets.
The recent travails involving the boardroom showdown between Charles and son James over the future of Voom has put a dent in efforts to add retailers, sources said. Sears and BrandsMart remain the highest-profile outlets selling the Voom service, though Redding, Cal.-based McMahan’s, a member of the Marta Buying Group, signed on in Dec. Voom also was near an agreement with Jacksonville, N.C.-based Furniture Fair, but the deal was put on hold after Cablevision announced plans to shut down or sell the service, sources said. Voom also was poised to start making pitches to retail buying groups starting with Marta this week and NATM next week, a source said. Voom moved late last year to target sales efforts on regional markets with high HDTV penetration. “We're trying to get more into the groups and we're here to introduce ourselves to them,” a Voom source said. A Sears spokeswoman said the retailer continues to sell Voom, while BrandsMart Pres. Michael Pearlman wasn’t available for comment.
“We are more than ever convinced of the viability of the Voom service,” Thomas Dolan said in a statement. “We believe our offer to Cablevision is in the best interests of Cablevision’s shareholders and Voom’s 46,000 subscribers across the nation. If we are able to complete negotiations with Cablevision, we are certain that Voom HD will emerge as a robust new vendor” that provides an alternative to DirecTV and EchoStar.