Cablevision Goes Satellite Amid Aura of Mystery

18 July 2003

“There’s never been a bird as powerful,” said Cablevision Systems chairman Charles Dolan, as he watched Thursday night’s launch from Cape Canaveral of his company’s $250 million (€223.30m; £157.38) Rainbow 1 satellite. Payload: nearly one billion shareholder dollars.

Rainbow 1 will offer a massive 468 channels of standard definition TV plus broadband internet access, although the final number of channels will be lower because some will be transmitted in high definition. It will compete head-on with DirecTV and EchoStar – between them boasting twenty million subscribers.

America’s number six cable operator has mystified Wall Street and the media alike. Virtually nothing is known about the space venture – least of all its underlying business plan. “There’s been a lot of speculation,” Dolan says, revealing only that he’ll begin selling the service nationwide on October 1, using Motorola decoder boxes. Until then, all else remains under the wraps.

But come October 1, he promises: “We’ll be elaborate and detailed and totally accurate” as to pricing, programming, equipment and other matters.

Last month Cablevision let it be known its directors had “approved a plan to pursue the spinoff” of the satellite service by year’s end. But spinoff of exactly what? When? And why?

Now Dolan seems to have backtracked, saying that a final decision probably won't be made until December. “We don't have to do it at all,” he tantalizes. “The board has to approve it. What the board authorized is an exploration [of a spinoff]. That is our intent.”

Dolan’s reticence has triggered a rash of nervous tics on Wall Street, not least because Cablevision has spent $342m on the project to date and committed itself to a further $564m. And not only the moneymen are concerned.

Says Satellite Business News editor Bob Scherman: “I see no viable business opportunity, given the assets Dolan has and the resources he has. He’s jumping out of the airplane and negotiating the price of the parachute on the way down.”

Data sourced from: USA Today; additional content by WARC staff