Sounds like more opportunity for HLIT:
At Cablevision, Space Is the Next Frontier
By Harry Berkowitz
STAFF WRITER
July 1, 2002
newsday.com
Cablevision Systems Corp. is rocketing ahead with a plan to launch a satellite TV service stretching from Maine to California, despite Wall Street warnings that the venture is pie in the sky and that the debt-laden company should drop it.
The cable TV giant plans to launch a powerful satellite next March for a service targeting 148 metropolitan areas from Bangor, Maine, New York City and Miami to Chicago, Detroit, Dallas, San Francisco and Seattle, according to filings with the Federal Communications Commission.
The idea is to compete head-on with DirecTV and EchoStar Communications, which are seeking regulatory authority to merge and which together would have more than 17 million satellite TV customers.
But the plan also would pit the Cablevision direct- to-home satellite TV service against the nation's major cable TV operators, including Cablevision itself, the biggest operator in the New York City metropolitan area, with 3 million subscribers.
The FCC, seeking to increase competition, already has granted Cablevision use of 11 satellite TV frequencies. They are the only satellite TV frequencies allocated to any company other than DirecTV, EchoStar and Dominion Video Satellite, which distributes Christian religious and inspirational programming.
Using those frequencies, Cablevision is carving up much of the United States into 22 circular regions that its single A2100 satellite should be able to reach using state-of-the-art spot-beam technology, according to a map in its FCC filings. The satellite, called Rainbow 1 for the Cablevision programming unit that oversees the project, is being built by Lockheed Martin. It must start providing service by Dec. 29, 2003, under the company's FCC mandate.
Many Wall Street analysts say the venture has little chance of success, given the economics of satellite TV and strength of the existing services. The skeptics say the venture is complicating Cablevision's efforts to close a potential funding shortfall of more than $500 million for its overall operating expenses next year. That funding gap is part of the reason Cablevision's stock price has plunged this year, they say.
"On the surface, it's a fairly dubious proposition," Matthew Harrigan, a satellite and cable TV analyst at Janco Partners in Denver, said of the venture. "It would be extraordinarily difficult."
Cablevision had planned to offer the service in far fewer geographic areas with far fewer channels. In an FCC filing two years ago, it promoted the service with the name and slogan, "Blast: TV for the way YOU live, where YOU live." The primary focus would be on packages of local and regional programming that would vary by metropolitan area. That might include broadcast stations such as WCBS and WNBC in the New York area, as well as exclusive coverage of local sports, news, traffic, weather, music and arts and leisure.
But advances in satellite technology have expanded the scope of the service envisioned by Bethpage-based Cablevision, which says it can now offer more than 1,000 different channels to the 148 metropolitan areas. And now it is asking the FCC to grant two extra frequencies so the venture (named R/L DBS) can add more national cable networks, target rural communities in addition to metropolitan areas and better compete.
"Given the impact of the proposed merger and the potential strength of the merged entity, a greater allocation of spectrum . . . would facilitate the development by R/L DBS of a more robust product offering," Benjamin J. Griffin, a lawyer for Cablevision in Washington, D.C., wrote to the FCC in February in commenting on the proposed DirecTV-EchoStar merger.
Cablevision chairman Charles Dolan, three other executives, and board member and legal consultant Charles D. Ferris, a former FCC chairman, followed up on the letter by meeting with FCC Commissioner Kathleen Q. Abernathy on March 7. The day before, Dolan, Ferris and two of the executives spoke with FCC Commissioner Kevin J. Martin on the phone. "The technology is extremely promising and we expect to have more to say about our plans in the coming months," Cablevision spokesman Charles Schueler said last week.
This year alone, Bethpage-based Cablevision is spending $140 million toward construction of the satellite. It can cancel the order by May 2003 and get a partial refund from Lockheed Martin, whose commercial satellite center is in Sunnyvale, Calif.
Jimmy Schaeffler, chairman of The Carmel Group in California, a research firm specializing in satellite TV, estimated the Cablevision venture could end up costing between $350 million and $500 million.
Cablevision has not indicated what it would charge customers for its satellite service. It also is unclear what programming the Cablevision satellite service might offer, although the company's Rainbow Media, which oversees the venture, operates an array of cable networks with national, regional and local content.
"Satellite TV, just like cable, is going to be very different in the future, and in these differences, there will be opportunity," Dolan told Newsday last year. He said the service could be successful without signing up nearly as many subscribers as DirecTV and EchoStar have. |
