Wall Street welcomed the news Monday that Cablevision Systems Corp. was apparently shuttering satellite service Voom within 30 days after a deal fell through to sell it to Cablevision founder Charles Dolan.
The board had given the parties until Feb. 28 to strike the deal, according to Alan Bezoza, SVP, broadband cable research, for financial analyst Friedman Billings Ramsey (FBR).
Despite the $50 million in shut-down costs FBR expects from the shuttering, it sees plenty of upside in the company's core cable and content businesses.
"With strong subscriber growth, we expect cable to deliver upside in the coming quarters," Bezoza said in his report. "With this debacle finally behind us, we think investors should continue to focus on Cablevision's outperforming core cable and content operations. While many investors speculate that Cablevision sits as a takeout candidate now that its operations have been 'cleaned,' we continue to rate the shares as an Outperform based solely on fundamentals," he said.
Cablevision's Rainbow DBS business, of which Voom! is the major component, showed an operating loss of $448.9 million in the fourth quarter. By contrast the Rainbow Media core cable nets, AMC, the Independent Film Channel and WE: Women's Entertainment, showed an operating income of $74.1 million, over three times the $20.6 million of the same quarter the previous year.
Voom!'s satellite assets are being sold to EchoStar for $200 million. In fact, the FCC just yesterday asked for comment on the sale. The FCC is looking for input on whether there are any any concentration issues given that Voom!'s departure reduces the number of competitors in the satellite market.
