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Cable Operators

EchoStar Gets Voom Bird for $200M

1/20/2005 12:56 PM Eastern

Cablevision Systems Corp. moved swiftly Thursday to sell off key assets behind the apparently doomed Voom satellite-TV service.

EchoStar Communications Corp. said late Thursday that it agreed to buy an orbiting satellite and satellite frequencies from Cablevision's Rainbow DBS unit for $200 million.

The development comes just days after Cablevision's board reportedly overruled the wishes of chairman Charles Dolan and concluded that it was time to shut down or sell off Voom.

Voom has already burned through about $400 million in funding.

EchoStar said it agreed to buy the “Rainbow 1” direct-broadcast satellite, located at 61.5 degrees west longitude, with the rights to 11 DBS frequencies at that location.

The satellite includes 13 frequencies, up to 12 of which can be operated in "spot-beam" mode. The “EchoStar III” satellite also operates from 61.5 degrees.

EchoStar said it is assessing how the Rainbow satellite's flexibility can best be utilized to enhance Dish Network's existing service. One likely option is for EchoStar to use the Voom assets to expand the number of HD channels it carries.

"Assuming this deal goes through, it would be nice to have the capacity. High-definition is one issue we've been looking at in terms of capacity," EchoStar spokesman Steve Caulk said Thursday after the news was released at about 7.30 p.m. (EST).

Cablevision said it would continue to explore strategic alternatives, including monetization, for its remaining Rainbow DBS-related assets, including programming, equipment and spectrum.

“Voom will continue to provide service to its current customers during a transition period,” the MSO said.

EchoStar is also getting ground facilities and related assets in Black Hawk, S.D.

The deal is subject to review by the Federal Communications Commission and other regulatory agencies.

Caulk said EchoStar executives first met with Cablevision executives "months ago" to discuss a possible sale. The deal was completed after the Cablevision board of directors met Tuesday.

After Cablevision shelved a plan to split Voom off into a separate company that also would contain Rainbow Media Holdings Inc. programming services, investors have been after Dolan and his son, Cablevision CEO James Dolan, to pull the plug on the money-losing service.

Voom’s concept was to deliver new original HD programming to fill a perceived void of HDTV fare, but for various reasons, consumers haven’t clamored to buy Voom since it was launched in the fall of 2003. It last reported about 26,000 customers, a decline from the previous report.

September