Voom losing more than it's gaining

[Gregg Lengling]

BY HARRY BERKOWITZ
STAFF WRITER

November 9, 2004

In a sign of mounting woes, the nationwide satellite TV service that Cablevision Systems Corp. launched last year lost more customers than it signed up in August and September, the company said yesterday.

And that's before the service, called Voom, began dropping its many non-paying customers in October, Cablevision said.

The disclosure came in an amended filing with the Securities and Exchange Commission, which is considering whether to approve the spinoff of Voom and three cable channels owned by Cablevision.

Cablevision also disclosed that rather than retain $350 million in preferred securities from AMC and WE: Women's Entertainment when the channels are spun off as part of the new company, as it had planned, it will shift the interest back into the spinoff because of "expected increases in the financing requirements."

That move will increase the new company's $1 billion in borrowing capacity and may smooth the approval process for the spinoff by cutting off links to Cablevision, said analyst Aryeh Bourkoff of UBS.

Cablevision's stock price fell by $1.06 per share, or 5 percent, to $20.03, on the news.

Voom, which competes with satellite TV giants DirecTV and EchoStar Communications, had 26,000 customers Sept. 30, compared with 28,700 on Aug. 31 and 25,000 on June 30, according to the SEC filing.

"Through the end of September 2004, we had attracted fewer subscribers than we anticipated and have lost more subscribers than we expected," the SEC filing states.

The service, which has struggled to overcome equipment, installation and operating glitches, continues to test and alter pricing, promotion and marketing approaches and probably will continue to do so into 2005, according to the filing.

"It is possible that at various times during this period we may lose more customers than we add," the SEC filing says.

A "large number" of the customers have never made payments to Voom or are behind in payments. In October, Voom began to cut them off. And many are unable to watch local broadcast channels through Voom.

Cablevision, the biggest cable TV operator in the New York City metro area, had hoped to complete the spinoff by September but now is aiming for the current quarter and has revised its filing four times.

The filing says Jericho-based Voom is considering scaling back its national effort to target "specific markets in the country which we believe are most promising" - referring to those with digital broadcast signals from local stations that Voom equipment can pick up.

Wall Street analysts are skeptical Voom will ever succeed, given its setbacks and the dominance of DirecTV and EchoStar. Those two have a total of more than 23 million customers, including a gain by DirecTV of more than 400,000 in the third quarter. Also, DirecTV plans to vastly expand its ability to provide high-definition TV programming, which is the heart of Voom's offering.

Since Voom was launched in October 2003, one of every three customers it attracted ended up dropping the service.
Copyright © 2004, Newsday, Inc.

[Mark Strube]

Good news find!! I had a feeling this would happen... it's just too specialized a service for right now. As soon as HDTV becomes more mainstream (which it's doing pretty quickly) the cable companies and other satellite companies will provide more and more HD content to their already huge customer bases, which will make small services like VOOM obselete... the way of "WOW" internet service. Remember that one?