Cablevision's Voom Faces Deepening Gloom

Cablevision (CVC) executives still can't persuade outsiders that Voom is anything but doomed.

The Long Island, N.Y.-based cable operator has sunk hundreds of millions of dollars to launch Voom, a new home satellite service focusing on high-definition television. Given the promising commercial prospects for HDTV -- demand that's evident in growing sales of large-screen HDTV sets, and in efforts by cable operators such as Comcast (CMCSA) to boost HDTV programming -- Cablevision's strategy makes sense, in theory.

But with each milestone that Cablevision announces in its development of Voom, there's a chorus, among analysts and other satellite-TV watchers, that each step forward is a step back for Cablevision and Rainbow Media Enterprises. That's the Cablevision subsidiary that will operate the satellite subsidiary once its expected spinoff from Cablevision takes place.

Try as hard as they can, outsiders are having a tough time imagining that Voom has a chance for success, given the availability of HDTV programming elsewhere and the huge head start enjoyed by the dominant U.S. satellite TV services, DirecTV (DTV) and EchoStar (DISH).

"There is not a single person in the satellite television business who can figure out what in heaven's name they are doing," says Bob Scherman, editor and publisher of the industry trade publication Satellite Business News.

Cablevision's shares fell 36 cents Monday to close at $21.40.

Asked whether there is some clever, contrarian strategy at work or a hidden payoff within Voom that critics may have overlooked, Scherman replies, "I get asked this 10 times a week. People are at the point where they're dumbfounded. And as much as people like [Cablevision founder] Chuck Dolan, they simply cannot figure out how someone with this experience and knowledge can be wasting so much money on a business plan which has less than zero chance of succeeding."