Cablevision eyes bird in the hand

EchoStar/DirecTV face upstart

Financially strapped Cablevision has come up with a novel solution to the monopoly problem posed by the proposed EchoStar/DirecTV union — it will rocket into the satcasting biz and offer a competing service.

The new venture proposed by Cablevision — Rainbow DBS — would offer a packed roster of programming to almost every TV market in the country, including more than 60 foreign-language channels and new hi-definition movie channels, including MGM classics.

First, though, Cablevision needs the FCC to take away 17 orbiting frequencies from a merged EchoStar/DirecTV and license them to Rainbow DBS, according to docs filed with the agency late last week.

Cablevision chair Charles Dolan –who has been floating the idea of entering the skyward market for some time — also wants some space on one of EchoStar’s orbiting birds.

Merger-minded

The pitch comes as the FCC wraps up its review of the proposed EchoStar/DirecTV marriage, which would unite the country’s two largest satcasters into one megacaster.

In meetings with FCC staffers last week, Cablevision said the launch of Rainbow DBS would ensure that a merged EchoStar/DirecTV has competition.

Cablevision’s determination to push forward with its expensive satcast plan has confounded skeptical investors, who have voiced repeated concern about the time, energy and cash being devoted to the project while Cablevision’s share price hovers at $6 and a $900 million funding gap looms. Cablevision already has plans to launch a Rainbow DBS satellite in March, but without the additional frequencies and a ride on EchoStar’s satellite, the reach of the new service would be considerably diminished.

Company has earmarked $75 million for the project in the second half of 2002 to build satellites, with $15 million more due next year. Sources say at least $150 million more must be spent before the service can launch.

Crossed signals

EchoStar and DirecTV were none too happy with Cablevision’s pitch, saying the very reason they decided to marry was the promise of additional frequencies — a precious commodity.

“We plan to use those 17 frequencies after the merger to offer more local TV stations, hi-def TV, international TV channels and high-speed Internet service,” EchoStar spokesman Mark Lumpkin said.

In other words, all the same services Cablevision wants the frequencies for.

Rainbow DBS’ national program lineup includes new hi-def channels AMC Monsters, Bravo Performance, Comedy Theater, Full Frontal Fashion, IFC Widescreen, Western Theater and Sports Theater, according to a prototype guide filed with the FCC.

That’s in addition to dozens of news channels and other regular fare. Noticeably absent from the prototype guide was the YES channel, which broadcasts Yankees games and with which Cablevision has been unable to strike a carriage deal this year.

The FCC declined to comment on Cablevision’s request.

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