Rainbow Media Holdings is shuttering U.S. operations of its Voom HD service and its package of 15 networks, Multichannel News reports. Rainbow blames the closure on DISH Networks (S DISH) no longer carrying the service and the anticipated lengthy legal battle over that discontinuation.
DISH was the largest distributor of Voom, but let go of the service after a contract dispute back in May. Rainbow filed suit for contract violation and is asking for $1 billion in damages. DISH booting Voom HD to the curb left only Rainbow parent company Cablevision (s CVC) as the sole U.S. distributor. Cablevision will replace the Voom content with new HD programming when Voom shuts down in January.
Pali Research hailed the move, with Richard Greenfield writing in his “Raising 2009 Free Cash Flow Again; We Can Finally Forget About VOOM” note to clients:
We believe Cablevision’s liquidity position has strengthened as the company is finally exiting non-core, money-losing businesses. We are pleased to see CVC management acting in the best interest of shareholders, with Jim Dolan putting the final nail in Voom’s coffin…
…While specific financials for the VOOM networks have never been made available, we know that CVC had been obligated in prior years to spend at least $100 mm annually (with minimal revenue from the channels).
Voom’s closing will result in layoffs, though some of Voom’s staff will stay on to maintain the international business, where Voom reaches 32 million subscribers in 36 countries.