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UPDATE: Wall Street Journal is reporting that Cablevision is contemplating shutting down its Voom high-definition satellite service, and has shelved its plans to spin-off the division in a public offering. Voom, despite its tech-cred has been a bit of a money pit for Cablevision, and in […]

UPDATE: Wall Street Journal is reporting that Cablevision is contemplating shutting down its Voom high-definition satellite service, and has shelved its plans to spin-off the division in a public offering. Voom, despite its tech-cred has been a bit of a money pit for Cablevision, and in third quarter alone the company lost $75 million and change. It has only 26,000 customers. WSJ says there is a good chance they might even sell it to someone like Echostar. Charlie Ergen, EchoStar’s chief executive, could be one of the likely buyers of Voom’s satellite, launched in 2003 and Thomas Eagan, an analyst with Oppenheimer & Co. told the Journal, that “Mr. Ergen might pay as little as $125 million, about half what it would cost to build and launch a new satellite.”

Following up on that news, I have learnt from those familiar with the whole situation, that Cablevision and Echostar are in advanced talks and the price tag for the deal is in the $250 million region. I tried calling Cablevision, Voom and Echostar, and obviously have not heard back from them. I spun the wheels most of the day trying to nail down more details … oh well. Just spoke to the Echostar spokesperson and he offered the boiler plate – we don’t comment on rumor and speculation, and this certainly has both. I think Voom is one of those ill-fated experiments, that came to market 24-months too soon. Lack of HD programming, and the miniscule penetration of HD television sets in the market have been a problem for Voom to get traction. Its parent, Cablevision is also suffering from the Michael Armstrong Syndrome where it is reacting to near-term-bump-up-the-stock-price and generate investment banking demands of Wall Street. “The bottom line is the investor fear is being removed because everyone has seen Voom as a money pit,” Richard Greenfield, an analyst at Fulcrum Global Partners and a vocal critic of Voom told The New York Times.

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  1. It came to market 24 months too soon? Try: It never had any relevant time to come to market. In 24 months, the “HD-ness” of Voom would, indeed, be more desirable. In 24 months, however, cable and satellite will have expanded HD offerings to meet the damands of their customers. There was never room — at this late stage — for yet another satellite provider. It would have needed something unique and sustainable vis a vis competitive advantage. “More HD” is not even a little sustainable.

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