Cablevision has appointed ad conglom Interpublic Group to handle marketing and promotions for its yet-to-launch Rainbow DBS platform, apparently confirming investor fears that the cabler will move forward with the risky project.
At the very least, Cablevision has signaled that it is committed to starting a satellite broadcasting service, possibly in the hope of attracting a buyer once the satellite is in orbit.
Cablevision is obliged under the terms of its FCC license to begin a service not later than Dec. 31 and is slated to launch the Lockheed Martin-built satellite in August. But investors are broadly opposed to the idea of Cablevision trying to compete against existing DBS providers DirecTV and EchoStar, not to mention existing cable operators.
Wachovia Securities analyst Jeff Wlodarczak best conveyed investor cynicism about Cablevision patriarch Chuck Dolan’s pet project when he noted last week that “if Cablevision’s Rainbow DBS-1 satellite falls into the ocean, it will be the first time that a company’s share price will actually rise on a satellite failure.”
Hopes for an exit
Investors are still hoping that Cablevision will either bow gracefully out of the business, in which it has already invested some $260 million, or else sell the bird and spectrum rights to rival EchoStar. So far, Echo chief Charlie Ergen has not bitten, despite the fact that EchoStar is currently using the spectrum.
Several IPG units, including ad agency Lowe and PR firm Weber Shandwick, have been attached to the campaign.
Total budget was not disclosed, though sources said Cablevision will unveil details about the Rainbow DBS service at its annual meeting next month. The company is also believed to be searching for a new brand name for the service, which is expected to focus on high-definition services.
Cablevision has so far only said it has committed to spend $80 million to launch the satellite this year.