Cablevision/Rainbow Birds Cost: $740 Million

[Gregg Lengling]

Cablevision's Rainbow DBS subsidiary disclosed last week that the five satellites it has ordered will cost the company about $740 million, subject to certain adjustments.

Rainbow DBS recently entered into a satellite procurement contract with Lockheed Martin, in which Lockheed Martin will construct five Ka-Band satellites and provide other services, but not launch support. The Cablevision unit said it intends to use the satellites at licensed orbital locations it holds at 62 degrees, 71 degrees, 77 degrees, 119 degrees and 129 degrees.

The contract requires delivery of the satellites during a 38 to 50 month period following execution of the contract.

Cablevision said in a Securities and Exchange Commission filing that Rainbow DBS has the right to terminate the Lockheed Martin agreement at any time, either in its entirety or with respect to individual satellites, subject to a required termination payment. While existing cash on hand will be sufficient to make all required payments under the contract through the first year, which are expected to total $48 million, Rainbow DBS has not identified funding sources it will use for further payments, the company said.