Cablevision Stuck With Voom Costs

Apr 18, 2005  •  Post A Comment

Cablevision Systems Corp. last week said that it expects to incur “significant costs” associated with shutting down its failed satellite venture Voom.

In a filing submitted last Thursday with the Securities and Exchange Commission, Cablevision said that it “anticipates incurring significant costs related to early termination of various contracts, other contractual obligations, employee termination benefits and other costs.”

How large those costs will be remains an open question. The company said it has not yet determined exactly how it will shutter the satellite operation but remains committed to its plan to make the service unavailable to new and existing customers by April 30.

Already, Voom has been a substantial drain on Cablevision’s bottom line. In 2004 alone the company lost more than $661 million on the satellite service, which it said has only 46,000 subscribers after more than a year in operation. When all is said and done, the venture could end up costing Cablevision well over $1 billion.

In addition to the losses, Voom’s struggles have pitted members of the founding Dolan family against each other. Voom was an idea hatched by Cablevision Chairman Charles Dolan, who pushed hard to keep the business going even as his son, CEO James Dolan, and Cablevision board members close to Charles Dolan lobbied to pull the plug. After several heated boardroom battles, Charles Dolan is said to have acquiesced in the decision to shut down Voom.

Meanwhile, the company is trying to recoup some of its Voom-related losses by marketing the 21 HD channels that were the foundation of Voom’s claim that it was a 100 percent high-definition satellite-TV service. The company said in an earlier filing that the same team that markets and sells its Rainbow cable channels AMC, IFC and WE: Women’s Entertainment will now also be responsible for selling the Voom channels to other cable and satellite companies.