I thought this might be of interest to VOOM customers.
EchoStar To Purchase Satellite from Cablevision
ENGLEWOOD, Colo.–(BUSINESS WIRE)–Jan. 20, 2005–EchoStar Communications Corporation (NASDAQ: DISH) announced today that it has agreed to purchase certain satellite assets from Rainbow DBS Co., a subsidiary of Cablevision Systems Corporation (NYSE: CVC), for $200 million.
Specifically, EchoStar has agreed to purchase Rainbow 1, a direct broadcast satellite (DBS) located at 61.5 degrees West Longitude, together 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 located at 61.5 degrees West Longitude broadcasts DISH Network TV programming to hundreds of thousands of consumers today using DBS spectrum controlled by EchoStar at that location. EchoStar is assessing how the Rainbow satellite’s flexibility can best be utilized to enhance DISH Network’s existing service. Also, as part of the transaction with Cablevision, EchoStar will acquire ground facilities and related assets in Black Hawk, S.D. The transaction is subject to review by the Federal Communications Commission and other regulatory agencies.
Follow up cut/paste:
Now it’s a bit more clear what will happen with VOOM, the satellite TV service from Cablevision. The service and its customers may remain in some limbo, given that VOOM said it will continue providing service during a transition period. But the satellite supporting the service and other assets are going to EchoStar. And that deal alone may have sealed VOOM’s eventual fate.
And probably no one could be happier than the folks on Wall Street. Some in the financial community thought a dark cloud had hovered over the Cablevision stock due to VOOM. Richard Greenfield of Fulcrum Global Partners said in November that the “correct management decision would be to shutter or sell VOOM, ending the cash ‘black hole’ they are perpetuating.”
What Wall Street got right was who would eventually get the VOOM stuff. Fulcrum’s Greenfield, Tom Eagan of Oppenheimer and Co., Craig Moffett of Bernstein Research, and others predicted that EchoStar would end up with the key assets, including the Rainbow satellite supporting VOOM.
And it appears the deal is a winner for DISH. The company bought a satellite already in orbit and associated ground facilities for $200 million. The satellite appears to be functioning normally, and EchoStar doesn’t have to go through the process of ordering, building and launching a satellite. Those points alone may appear that DISH got the assets on the cheap side.
The asset is already in space, and it’s in a DBS orbital location where EchoStar already conducts operations. And it gives the company access to more orbital capacity, a critical component given that TV viewers will eventually be moving to more advanced services and programming, including more high def.
The next big event will be regulatory approval, including a blessing from the Federal Communications Commission. Expect the companies involved to push for a quick OK on this deal while at The Portals.