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CABLEVISION VOOM: Fee for dish service to begin
BY HARRY BERKOWITZ
STAFF WRITER
March 18, 2004
Five months after launching a nationwide satellite TV service, Cablevision Systems Corp. is about to take the training wheels off Voom.
But doubts remain about the service, which stresses high-definition programming.
Voom, which extended a free-trial program by two months as it battled technical problems and programming gaps, will begin charging its original customers a monthly subscriber fee April 1.
In another change, instead of charging a hefty $749 for the required equipment, as it did originally, Voom has begun offering a satellite dish and set-top box for $9.50 per month.
And next month, Cablevision plans to file regulatory documents to spin off Voom, along with three of the company's Rainbow Media cable channels including AMC, as a separate company with its own stock.
But Voom, which ran behind in making deals to carry such key channels as CNN, CNBC, HBO and Bravo, is still missing some of the most popular ones.
Those include ESPN, Fox News, USA, Lifetime, Sci-Fi, Food Network and Home & Garden TV.
"The major holes that were missing from our lineup have been filled with the exception of ESPN," said William Casamo, executive vice president at Voom. "We are in discussions with ESPN and we hope to have it on shortly."
The incubation period has not been easy or cheap.
By the end of last month, Voom signed up only 1,627 customers. Its satellite competitors, DirecTV and EchoStar Communications, have a combined total of more than 21 million subscribers and each adds more than 300,000 per quarter.
"Bringing down the up-front cost to essentially zero on the equipment fee has addressed the number one concern that people had," Casamo said.
Voom, which charges subscribers $40 or $80 per month for basic lineups, depending on the number of regular and high-definition channels, also ran into problems with the operation of its satellite receivers and installation of over-the-air antennas on homes, which receive the high-definition signals of local stations.
Casamo said Voom has made "major improvements in the stability" of the set-top boxes by zapping down software fixes from the Voom satellite and installers are getting better at putting up the digital antennas.
Voom also has stepped up advertising, including two spots in the Academy Awards show.
Without any subscriber revenue, Voom, which has been creating its own high-definition channels and a national news network with five regional bureaus in New York, Los Angeles, Chicago, Miami and Dallas to set itself apart, chalked up an operating loss of $55 million in the fourth quarter of last year. It has a total of 35 HD channels.
This year, Voom, based in Jericho, expects $399 million in investment costs and operating losses, according to Cablevision's annual financial filing.
"The principal challenge for this business is to attract a sufficient subscriber base to reach and exceed a break-even point and to do so with subscriber acquisition and other costs that are within its funding capabilities," Cablevision's filing said.
Wall Street analysts are happy Cablevision is splitting Voom from the company but have doubts about the service.
"I don't see how this has a remote chance of succeeding," said Bob Scherman, publisher of Satellite Business News. Morgan Stanley analyst Richard Bilotti, however, predicts Voom could attract about 1.2 million subscribers by 2006.
Copyright © 2004, Newsday, Inc.