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Cablevision sells satellite unit to EchoStar
Unprofitable venture fetches $200 million
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NEW YORK - Moving to unload an unprofitable venture, Cablevision Systems Corp. on Thursday sold its satellite broadcasting business to rival EchoStar Communications Corp. for $200 million cash.
The Long Island-based cable TV provider started the high-definition satellite venture, which is marketed under the brand name VOOM, in the fall of 2003. But the operation has struggled to turn a profit and has dragged on Cablevision's finances and share price, as investors worried about how long the company would fund VOOM.
The deal also calls for EchoStar, based in Englewood, Colo., to acquire ground facilities and related assets in Black Hawk, S.D. The sale is subject to review by the Federal Communications Commission and other regulators.
In a statement, Cablevision said it was continuing to review options for its remaining satellite assets, and that VOOM service would continue "during a transition period."
In its third quarter earnings report last year, Cablevision said the VOOM service had just 26,000 customers and had posted an operating loss of $75.3 million on revenues of $5.9 million.
EchoStar said it's assessing how the Cablevision satellite can be used to enhance the company's DISH Network's existing service.
Cablevision has about 3 million cable customer households around New York City. It also owns Madison Square Garden, the New York Knicks basketball team and the New York Rangers hockey team.
Cablevision shares rose $1.10, or 4.5 percent, to close at $25.48 Thursday on the New York Stock Exchange. On Dec. 21, when the Bethpage, N.Y.-based company canceled plans to spin off the satellite unit and began exploring alternatives, the shares surged more than 13 percent.
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