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."

Prompting the latest round of head-shaking was Cablevision's announcement last week that it had signed a contract with Lockheed Martin ( LMT) under which the aerospace company would construct five new satellites for Voom for a price of $740 million.

About the only bright spots that analysts saw in that announcement was that the contract -- which Cablevision says will require $48 million of payments in the first year -- won't require huge upfront costs for Voom, and is cancelable by the satellite operator, subject to a termination fee.

While the downside to Cablevision itself may be limited, given Rainbow's expected spinoff, news like this continues to weigh on Wall Street's valuation of the combined Cablevision/Rainbow.

The Lockheed Martin announcement prompted Lehman Brothers analyst Vijay Jayant to cut his price target on Cablevision on Monday from $24 to $23. "Given the limited opportunity for Rainbow DBS," writes Jayant in his research report, "executing on the contract to construct five ... satellites will destroy equity value."

In the best-case scenario, writes Jayant, no new satellites are built but a $100 million termination fee is incurred. In that case, RME -- which also includes the national programming services American Movie Classics, the Independent Film Channel and WE: Women's Entertainment -- is worth $1 per Cablevision share.

In the worst case, Jayant calculates that all five satellites are built, requiring $1.2 billion in additional funding -- a number covering not only construction but also launch and insurance costs. "A decision by Voom to think about constructing five ... satellites makes the bear case outlook on Rainbow Media take a higher probability," writes Jayant. (The analyst has an equal-weight rating on Cablevision; Lehman hasn't done recent banking for the company.)

Under one theory, Cablevision could be investing in Voom in order to sell it to DirecTV or EchoStar -- EchoStar being more likely, since DirecTV recently announced plans to launch satellites that would increase its own capacity for transmission of HDTV programming.

But Scherman, for one, says EchoStar CEO Charlie Ergen is unlikely to pay what Cablevision CEO James Dolan would want to recover costs on Voom. "The notion that Jimmy Dolan is going to outnegotiate Charlie Ergen is something laughable," Scherman says.