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Cablevision Moves on Rainbow DBS, VOOM Future


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#1 OFFLINE   Chris Blount

Chris Blount

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Posted 02 August 2004 - 05:21 AM

Cablevision detailed money requirements for its Rainbow DBS and VOOM satellite TV venture in a filing sent to the Securities a nd Exchange Commission late last week.

The company said funding needs for Rainbow DBS in 2004, which reflect capital investment, operating losses and funds required to develop programming, are expected to total $482 million. The amount includes about $85 million invested in DTV Norwich, an entity that acquired licenses from the Federal Communications Commission to provide terrestrial MVDDS service.

The filing stated that $237 million is coming from Cablevision as an equity investment on or prior to the date of the upcoming spin-off of the Rainbow DBS/VOOM business. In addition, Rainbow Media Holdings has the ability to borrow up to $100 million under a credit agreement and use proceeds of those borrowings to make equity investments in Rainbow DBS. And a bank has committed to purchase $250 million of Rainbow Media Holdings senior subordinated debentures, proceeds of which can be invested in Rainbow DBS, the company said.

Cablevision said it believes the investments will be sufficient to fund cash requirements for Rainbow DBS during the next 12 months.

Cablevision's moves with VOOM and Rainbow DBS got positive reviews from Wall Street.

Richard Greenfield with Fulcrum Global Research said Cablevision is providing restrictive covenants on how much Rainbow can spend on VOOM. Greenfield said moves by the company so far prevents VOOM from hurting the value of existing Cablevision/Rainbow networks that are part of the spin-off and should boost investor confidence that a financing will get done. Also, spending is capped at $150 million annually and $600 million total for the spin-off, the analyst said.

In a separate note, Cablevision said Rainbow DBS has not identified funding sources for the construction and launch of five Ka-Band satellites for the company's FCC authorizations. Also, the company said it has not identified financing sources for the build-out of the infrastructure for DTV Norwich's MVDDS licenses.

http://www.skyreport.com (Used with permission)

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